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Gold Prices Edge Lower Amid Stronger USD; FOMC Decision in Focus

Gold Prices Dip as USD Strengthens

Gold Prices Edge Lower Amid Stronger USD; FOMC Decision in Focus

Gold prices (XAU/USD) trade with a bearish tone during the European session on Tuesday, slipping closer to the one-week low reached on Monday. The strength of the US Dollar (USD), supported by elevated US Treasury yields, weighs on the non-yielding precious metal. Additionally, the bullish sentiment in equity markets diverts flows away from gold as a safe-haven asset.

Despite the downside pressure, losses for gold remain limited as investors await the Federal Reserve’s (Fed) policy decision for further clarity on the pace of future rate cuts. Traders are particularly focused on the Fed’s policy statement, dot plot, and Chair Jerome Powell’s press conference, which will likely provide critical insights into the Fed’s monetary policy trajectory. Meanwhile, the release of US Retail Sales data later in the North American session may offer short-term trading opportunities.

Technical Analysis: Key Levels to Watch

  • Support Levels:
    The $2,644-$2,643 zone, which represents the one-week low, provides immediate support. A decisive break below this area could expose gold to further downside toward the $2,625 level. Beyond that, the monthly trough at $2,614 and the critical $2,600 psychological mark come into focus. A breach of $2,600 may trigger significant bearish momentum, paving the way for deeper declines.
  • Resistance Levels:
    On the upside, immediate resistance lies in the $2,664-$2,666 range, marking the overnight swing high. A break above this could target the $2,677 region. Sustained strength beyond $2,677 would open the door for a rally toward the $2,700 psychological level, with further gains likely extending to the monthly high of $2,726. A break above $2,726 would signal a resumption of the bullish trend.

Key Catalysts for Gold’s Next Move

  • FOMC Decision:
    The Fed’s stance on interest rates, reflected in its updated dot plot and Chair Powell’s commentary, will heavily influence gold prices. A less aggressive approach to rate cuts could support the USD, exerting additional pressure on gold.
  • US Retail Sales Data:
    Ahead of the Fed’s announcement, traders will analyze November’s retail sales figures for insights into consumer spending and its impact on broader economic activity.