Gold price holds steady amid cautious sentiment ahead of FOMC decision
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Gold price remains range-bound around $2,650 early Tuesday as investors adopt a wait-and-see approach ahead of the critical Federal Reserve (FOMC) policy decision on Wednesday. The non-yielding precious metal is struggling to attract significant traction amid expectations of a less dovish Fed stance, supported by elevated US Treasury yields and a firm US Dollar.
The US economy's resilience, highlighted by Monday's robust PMI data, reinforces the narrative that the Fed may adopt a cautious tone regarding further rate cuts. The US Services PMI surged to 58.5 in December, the highest level in over three years, while the Composite PMI rose to a 33-month high of 56.6. Although manufacturing activity dipped to a three-month low, the overall economic picture continues to dampen expectations of an aggressive Fed easing cycle.
The benchmark 10-year US Treasury yield climbed to its highest level in nearly a month, bolstering the US Dollar and capping Gold's upward momentum. The CME FedWatch Tool indicates that markets have fully priced in a 25-basis-point rate cut for Wednesday's FOMC meeting. However, concerns about President-elect Donald Trump's inflationary policies have led to speculation that the Fed may signal a pause in further rate reductions.
Geopolitical Risks Lend Support to Gold
Amid the cautious sentiment, geopolitical tensions continue to provide underlying support for the safe-haven metal. Renewed conflict risks, including US sanctions on North Korea and Russia, along with the escalating Middle East tensions following ballistic missile strikes by Yemen's Houthis, add to Gold's appeal.
Technical Outlook: Key Levels to Watch
From a technical standpoint:
Immediate support rests near $2,644-2,643, marking Monday’s one-week low. A breach below could expose the $2,625 level, followed by the monthly low around $2,614 and the psychological $2,600 mark.
On the upside, the overnight high near $2,664-2,666 acts as the first significant resistance. Sustained gains beyond this could push Gold toward $2,677, with a further rally targeting the $2,700 round figure.
A breakout above $2,726 would mark the monthly swing high and resume Gold's broader upward trend.
Market Focus: US Data and FOMC Outlook
Investors now await the US Retail Sales data later today for near-term direction. However, the spotlight remains firmly on Wednesday’s FOMC decision, which could provide clearer guidance on the Fed’s rate path. A hawkish undertone may trigger renewed selling pressure on Gold, while dovish signals could offer a much-needed lift to the precious metal.
For now, Gold price remains confined to a narrow range, with traders reluctant to commit ahead of this pivotal monetary policy event.
The US economy's resilience, highlighted by Monday's robust PMI data, reinforces the narrative that the Fed may adopt a cautious tone regarding further rate cuts. The US Services PMI surged to 58.5 in December, the highest level in over three years, while the Composite PMI rose to a 33-month high of 56.6. Although manufacturing activity dipped to a three-month low, the overall economic picture continues to dampen expectations of an aggressive Fed easing cycle.
The benchmark 10-year US Treasury yield climbed to its highest level in nearly a month, bolstering the US Dollar and capping Gold's upward momentum. The CME FedWatch Tool indicates that markets have fully priced in a 25-basis-point rate cut for Wednesday's FOMC meeting. However, concerns about President-elect Donald Trump's inflationary policies have led to speculation that the Fed may signal a pause in further rate reductions.
Geopolitical Risks Lend Support to Gold
Amid the cautious sentiment, geopolitical tensions continue to provide underlying support for the safe-haven metal. Renewed conflict risks, including US sanctions on North Korea and Russia, along with the escalating Middle East tensions following ballistic missile strikes by Yemen's Houthis, add to Gold's appeal.
Technical Outlook: Key Levels to Watch
From a technical standpoint:
Immediate support rests near $2,644-2,643, marking Monday’s one-week low. A breach below could expose the $2,625 level, followed by the monthly low around $2,614 and the psychological $2,600 mark.
On the upside, the overnight high near $2,664-2,666 acts as the first significant resistance. Sustained gains beyond this could push Gold toward $2,677, with a further rally targeting the $2,700 round figure.
A breakout above $2,726 would mark the monthly swing high and resume Gold's broader upward trend.
Market Focus: US Data and FOMC Outlook
Investors now await the US Retail Sales data later today for near-term direction. However, the spotlight remains firmly on Wednesday’s FOMC decision, which could provide clearer guidance on the Fed’s rate path. A hawkish undertone may trigger renewed selling pressure on Gold, while dovish signals could offer a much-needed lift to the precious metal.
For now, Gold price remains confined to a narrow range, with traders reluctant to commit ahead of this pivotal monetary policy event.