- Gold price is drifting lower for the fourth straight day and has dropped to a fresh multi-week low, currently around the $1,974 region.
- Reduced bets for an early rate cut by the Fed continue to weigh on the yellow metal.
- Traders are eagerly awaiting the crucial FOMC policy decision for a fresh directional impetus.
Gold price (XAU/USD) remains under selling pressure for the fourth consecutive day on Tuesday and has fallen to over a three-week low, around the $1,974 region heading into the European session. Data released from the United States (US) showed that consumer prices rose unexpectedly in November. This comes on the back of the stronger-than-expected US jobs report on Friday and weakens the case for an early policy easing by the Federal Reserve (Fed). This, in turn, is seen as a key factor driving flows away from the non-yielding yellow metal amid hopes for the introduction of more stimulus measures in China.
Investors remain concerned about weak economic growth in China and geopolitical risks, which could keep a lid on the optimism and provide some support to the safe-haven Gold price. Traders might also refrain from placing aggressive bearish bets and prefer to wait for the outcome of the highly-anticipated FOMC monetary policy meeting. The market focus, meanwhile, will remain glued to the accompanying policy statement and updated economic projections, which include the so-called “dot plot”. This will be followed by Fed Chair Jerome Powell’s post-meeting press conference.
Investors will look for cues about an imminent shift in the Fed’s policy stance, which, in turn, will play a key role in influencing the USD price dynamics and provide a fresh directional impetus to the Gold price. The markets are currently pricing in the possibility of at least four 25 basis point (bps) rate cuts by the Fed in 2024. Hence, a dovish pivot will exert heavy pressure on the US Dollar (USD) and trigger a fresh leg up for the non-yielding Gold price. Nevertheless, the crucial FOMC policy decision should infuse volatility in the financial markets and provide some meaningful impetus to the XAU/USD.
Daily Digest Market Movers: Gold price continues to lose ground as traders await Fed policy decision
- The uncertainty over the Federal Reserve’s near-term policy outlook holds back traders from placing directional bets around the Gold price and leads to subdued range-bound price action.
- Data released from the United States on Tuesday showed that consumer prices rose unexpectedly in November, forcing traders to further scale back bets for a rate cut in March.
- The US Labor Department reported that the headline Consumer Price Index (CPI) edged up 0.1% in November and the yearly rate ticked down to 3.1% from the 3.2% previous.
- The annual Core CPI inflation, which excludes volatile food and energy prices, held steady at 4.0% as forecast and rose 0.1% on a monthly basis, little changed from the previous month.
- The November numbers were still well above the Fed’s 2% target and come on top of the stronger-than-expected US jobs report last Friday,
