Gold Prices Hold Firm Ahead of Fed Decision

A Cautious Market Awaits the Fed

Gold prices maintained a steady footing on Monday, as investors braced for the Federal Reserve’s interest rate decision. The precious metal, often seen as a hedge against inflation and economic uncertainty, was buoyed by a combination of factors, including expectations of a rate cut and lingering geopolitical tensions.

The release of mixed US PMI data provided a brief spark to the US Dollar, causing a minor dip in gold prices. However, the market’s focus remained firmly on the Fed’s upcoming monetary policy decision. While a 25 basis point rate cut is widely anticipated, investors are keenly interested in the Fed’s forward guidance and economic projections.

Potential Impact of US Fiscal Policy

The potential impact of the incoming Trump administration’s fiscal policies, which may include inflationary measures, adds another layer of uncertainty to the gold market. If inflation expectations rise, gold could benefit as it is often seen as a hedge against inflation. However, if the Fed adopts a more hawkish stance to combat inflation, it could put downward pressure on gold prices.

Technical Outlook

From a technical perspective, gold prices are currently trading near the 50-day Simple Moving Average (SMA). A break below this level could signal further downside, with the 100-day SMA serving as the next support level. Conversely, a move above the 50-day SMA could indicate a potential uptrend, with the next resistance level at the $2,700 mark.

As the Fed’s decision looms large, gold prices are likely to remain volatile. Investors should closely monitor economic indicators, geopolitical events, and central bank policies to gauge the potential impact on the precious metal.