Gold price sticks to strong intraday gains near two-week high, FOMC minutes awaited

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  • Gold price catches aggressive bids on Tuesday and climbs to over a two-week high. 
  • Dovish Fed expectations, sliding US bond yields and a weaker USD remain supportive.
  • Bulls seem unaffected by a positive risk tone ahead of the key FOMC meeting minutes. 

Gold price (XAU/USD) regains strong positive on Tuesday and maintains its bid tone near a two-week high through the early European session. The US Dollar (USD) selling remains unabated in the wake of dovish Federal Reserve (Fed) expectations, which, in turn, is seen as a key factor acting as a tailwind for the precious metal. The incoming disappointing US macro data eliminated any surviving bets of further rate increases and instead fueled speculation about a series of rate cuts in 2024. This leads to a further decline in the US Treasury bond yiels and lends additional support to the non-yielding yellow metal. 

The aforementioned supporting factors, to a larger extent, helps offset a generally positive tone around the equity markets, which tends to undermine demand for the traditional safe-haven Gold price. Investors continue to cheer the latest optimism over hopes for more stimulus measures from China to support the post-pandemic recovery. Market participants now look to the release of the FOMC meeting minutes, due later during the US session, for some meaningful impetus amid the uncertainty over the the timing of when the Fed will begin easing its monetary policy.

Daily Digest Market Movers: Gold price advances to fresh two-week top on sustained USD selling, ahead of FOMC minutes

  • The US Dollar selling remains unabated in the wake of dovish Federal Reserve expectations and assisted the Gold price to regain strong positive traction on Tuesday.
  • Investors now seem convinced that the Fed has completed its interest rate-hiking cycle and are looking for cues on when the central bank could begin easing its monetary policy.
  • The rate-sensitive 2-year US government bond yield remains below the current 5.25-to-5.50% Fed funds target, suggesting that momentum in favour of rate cuts is building.
  • The CME’s Fedwatch tool points to a roughly 30% chance that the Fed will start cutting rates as soon as March 2024 and a nearly 100 bps of cumulative easing by the year-end.
  • The benchmark US 10-year Treasury yield drops to a fresh two-month low and undermines USD, offsetting the upbeat market mood and benefitting the non-yielding yellow metal.
  • Investors turned optimistic after  Chinese officials vowed to roll out more policy support for the country’s beleaguered real estate sector and drive stronger momentum for growth.
  • China’s new finance minister Lan Fo’an said that the country would boost budget spending to support the post-pandemic recovery in the world’s second-largest economy.
  • Fed officials, meanwhile, have not ruled out the possibility that more interest rate hikes could be needed should a change in economic data require it.
  • Richmond Fed President Thomas Barkin said on Monday that inflation is likely to remain stubborn and force the central bank to keep rates higher for longer than investors currently anticipate.
  • This, in turn, could act as a headwind for the precious metal as traders look to the FOMC minutes for fresh cues about the Fed’s future policy action and some meaningful impetus.

Technical Analysis: Gold price bulls retain control could aim back to challenge multi-month peak near $2,009-2,010 region

From a technical perspective, some follow-through buying beyond last week’s swing high, around the $1,993 area, should allow the Gold price to reclaim the $2,000 psychological mark. The momentum could get extended further towards retesting a multi-month peak, around the $2,009-2,010 area touched in October. A sustained strength beyond the latter will be seen as a fresh trigger for bullish traders and set the stage for an extension of the recent goodish rebound from levels just below the 200-day Simple Moving Average (SMA).

On the flip side, the $1,978-1,977 region now seems to protect the immediate downside ahead of the overnight swing low, around the $1,965 zone. Failure to defend the said support levels could make the Gold price vulnerable to accelerate the slide back towards challenging the 200-day SMA, currently near the $1,938-1,937 zone. This is followed by the 100- and the 50-day SMAs confluence, around the $1,930-1,929 area, which if broken decisively will shift the near-term bias in favour of bearish traders and prompt some technical selling.

US Dollar price this week

The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the Canadian Dollar.

USD   -0.49% -0.65% -0.09% -1.06% -1.69% -1.27% -0.30%
EUR 0.49%   -0.16% 0.40% -0.56% -1.18% -0.77% 0.19%
GBP 0.65% 0.16%   0.57% -0.40% -0.98% -0.60% 0.35%
CAD 0.09% -0.40% -0.57%   -0.97% -1.59% -1.17% -0.21%
AUD 1.04% 0.56% 0.41% 0.96%   -0.62% -0.21% 0.75%
JPY 1.66% 1.13% 0.78% 1.52% 0.57%   0.37% 1.36%
NZD 1.25% 0.77% 0.61% 1.17% 0.20% -0.41%   0.95%
CHF 0.31% -0.19% -0.35% 0.21% -0.75% -1.38% -0.96%  

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).

Economic Indicator

United States FOMC Minutes

FOMC stands for The Federal Open Market Committee that organizes 8 meetings in a year and reviews economic and financial conditions, determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth. FOMC Minutes are released by the Board of Governors of the Federal Reserve and are a clear guide to the future US interest rate policy.

Read more.

Next release: 11/21/2023 19:00:00 GMT

Frequency: Irregular

Source: Federal Reserve

Minutes of the Federal Open Market Committee (FOMC) is usually published three weeks after the day of the policy decision. Investors look for clues regarding the policy outlook in this publication alongside the vote split. A bullish tone is likely to provide a boost to the greenback while a dovish stance is seen as USD-negative. It needs to be noted that the market reaction to FOMC Minutes could be delayed as news outlets don’t have access to the publication before the release, unlike the FOMC’s Policy Statement.