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Gold (XAU/USD) Faces Resistance Ahead of FOMC

Gold(XAU/USD) faces resistance amid rising US bond yields ahead of a pivotal Fed decision, sparking market anticipation.

  • US 2-year yields approach highs last seen in 2007.
  • Gold struggles to break resistance ahead of the imminent Fed decision.

Gold (XAU/USD) Under Pressure Ahead of FOMC

Gold (XAU/USD) price is feeling the heat as US Treasury yields surge to levels last seen over a decade ago, with traders anxiously awaiting the Federal Reserve’s decision. As markets brace for potential inflation and a hawkish stance by the central bank, gold grapples with stubborn resistance levels, and experts are closely monitoring the outcome of the FOMC meeting.

US 2-year yields are on the verge of reaching heights last witnessed in 2007, underscoring the growing concerns regarding inflation. At the same time, the 10-year benchmark recently hit levels not seen since November 2007. This surge in yields is partly driven by escalating oil prices, which are contributing to the inflation narrative. Additionally, investors are demanding greater yields due to increased US Treasury issuance this year, with approximately $103 billion of longer-term US Treasuries sold just last week.

Market attention centers on the post-decision press conference and the release of the latest Summary of Economic Projections. The ‘dot plot,’ eagerly anticipated, reveals interest rate expectations from FOMC members, providing insights into the central bank’s monetary stance.

Gold’s Struggle Against Resistance and Moving Averages

Gold is currently grappling with a stubborn resistance zone situated between $1,932/oz. and $1,940/oz. The zone presents a formidable challenge for the precious metal. Additionally, a tight cluster of three simple moving averages resides within the area, ranging from $1,924/oz. to $1,931/oz. This consolidation of moving averages complicates the outlook for gold. A breakthrough below these moving averages would target support levels at $1,900/oz., followed by $1,893/oz. And $1,885/oz.

Conclusion

Gold’s performance is influenced by rising US Treasury yields due to inflation concerns and anticipated Fed hawkishness. The precious metal struggles against resistance levels and moving averages as the central bank’s decision approaches. Traders and investors eagerly await the FOMC’s insights, especially the dot plot, to gauge gold’s and the broader market’s future.

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