A crucial wait before the Fed’s decision
The price of gold (XAU/USD) remains hesitant this Wednesday morning, moving within a narrow band as investors carefully scrutinize the monetary policy of the American Federal Reserve (Fed). After a decline the day before, the yellow metal seems to be resisting, remaining above its lowest level of the previous week. This relative stability, however, is being tested by high US bond yields and a dollar which maintains its upward momentum.
The prospect of a less accommodative Fed continues to keep U.S. government bond yields high, weighing on the appeal of the non-yielding metal. However, investors remain cautious, awaiting updated economic projections and statements from Fed Chairman Jerome Powell.
Economic factors in the background
Data released Tuesday by the U.S. Census Bureau showed retail sales rose 0.7% in November, beating forecasts. These figures underline robust consumption, which, combined with the resilience of the US economy and moderate inflationary pressures, could prompt the Fed to interrupt its cycle of rate cuts at its next meeting in January.
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These expectations propelled the yield on 10-year US Treasury bonds to its highest level since late November, increasing pressure on gold. However, global geopolitical tensions and trade uncertainties allow the precious metal to limit its losses, thus maintaining its status as a safe haven.
Geopolitics at the heart of concerns
On the international scene, tensions are intensifying. In Ukraine, an attack in Moscow claimed the life of a senior Russian military official, increasing fears of an escalation of the conflict. Furthermore, in the Middle East, indirect negotiations suggest a potential ceasefire agreement between Israel and Hamas, while clashes persist in Syria.
These events, while diverse, help maintain demand for assets perceived as safe, such as gold, amid heightened risks.
A mixed technical analysis
On the technical side, the gold price finds key support around $2,633, while a drop below $2,600 could signal a new bearish phase. Conversely, a recovery beyond $2,666 would pave the way towards the symbolic threshold of $2,700, with upside potential up to $2,726.
The next steps: between markets and monetary policy
The publication of data on the US real estate market and comments from Jerome Powell will provide valuable indications on the future evolution of interest rates. These elements will play a central role in determining the trajectory of the US dollar and, in turn, the evolution of the price of gold.
As global tensions and economic uncertainties persist, gold remains a key indicator of market sentiments and overall dynamics.
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