Gold price (XAU/USD) remains subdued during the early European session on Wednesday. However, it shows resilience by holding above the one-week low reached the previous day. The anticipation of a less dovish Federal Reserve (Fed) supports elevated US Treasury yields, posing challenges for the non-yielding yellow metal. Still, the cautious sentiment among US Dollar (USD) traders ahead of the Federal Open Market Committee (FOMC) decision limits aggressive movements.
Fed’s Decision and Its Influence on Gold Prices
Market participants eagerly await the updated economic projections, including the dot plot, and Fed Chair Jerome Powell’s comments during the post-meeting press conference. These developments will provide clarity on the potential path for rate cuts. The Fed’s actions will directly influence USD demand and, consequently, gold prices. Persistent geopolitical risks and trade tensions further add to the market’s cautious tone, preventing significant declines in XAU/USD.
Gold Faces Pressure Amid Economic Resilience
The US Census Bureau reported a 0.7% rise in November’s retail sales, surpassing expectations of 0.5%. This data reflects strong consumer spending, which aligns with the broader economic momentum. Despite these indicators, the Fed is expected to pause its rate-cutting cycle, buoyed by resilient economic conditions and inflationary trends. The robust economy has driven the 10-year US Treasury yield to its highest point since late November, acting as a headwind for gold prices.
Geopolitical Events and Their Role in Gold’s Appeal
Recent geopolitical developments have influenced market sentiment:
- Ukraine Conflict: Reports of heightened tensions following an explosion in Moscow have raised concerns about escalation.
- Middle Eastern Negotiations: Progress toward a Gaza ceasefire deal between Israel and Hamas provides mixed signals on global stability.
- Syria’s Unrest: Ongoing clashes in northern Syria emphasize unresolved conflicts in the region.
These events reinforce gold price safe-haven appeal, helping it retain a degree of support despite economic headwinds.
Key Levels for Gold Prices
From a technical standpoint, XAU/USD’s upward movement faces resistance near the $2,664–2,666 range, with a further obstacle at $2,677. Sustained gains above these levels could lead to a push toward $2,700 or the monthly swing high of $2,726.
On the downside, immediate support lies around $2,633, followed by the monthly low near $2,614. A decisive drop below $2,600 may signal further bearish momentum, intensifying gold’s recent pullback from its one-month peak.
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