Gold abandons earlier gains, slides ahead of FOMC’s decision

Gold price retreats from the day’s high and fails to hold to earlier gains after a busy US economic calendar released key data, which was worse than estimated.

Gold was not able to benefits from the softer US dollar, while US Treasury bond yields continued to push downwards. At the time of writing, the Gold Index (XAU/USD) exchanges hands at around $1925 per ounce versus the previous closing at $1928.26.

Wall Street is awaiting the Fed’s monetary policy decision. US economic data showed that the labour market continues to ease as the ADP National Employment Change, which reports private hiring revealed that companies hired 106K employees, below the expected 178K. Later on Wednesday, the JOLTs Job Openings report showed that vacancies rose to 11.01M exceeding estimates of 10.25M.

In addition, factory activity was updated by two firms, showing that manufacturing activity remains in contractionary territory. The S&P Global Manufacturing PMI for January jumped by 49.9 above the 46.8 estimates, better than expected but at recessionary territory.

The ISM Manufacturing PMI for January plunged to 47.4, below December’s 48.4, and dropped for the third straight month pushing the index to its lowest level since May 2020.

Gold traders are focused on the Fed’s rate decision. Traders expect a 25 basis points hike and further guidance from the US central bank. At around 13:30 GMT, the Fed Chair Jerome Powell will give remarkable remarks and each word would be digested as investors expect a Fed pivot, from hiking rates, to cutting them by the second half of 2023.