Gold retreats following FOMC minutes

Gold retreats to a two-week low as the FOMC minutes reveal no dovish slant even though they acknowledge progress in inflation. The US Dollar Index rises 1.11% while the precious metal struggles with a loss of nearly 1%, indicating strong USD performance. The market is focusing on December’s Nonfarm Payrolls report as well as future US ADP Employment data, Jobless Claims, and PMIs.

Following the release of the Fed’s December meeting minutes, which contained no dovish indications, the price of gold fell during the last hour of trading on Wednesday. As a result, the Greenback started to rise again, hitting a fresh 11-day high before slightly retreating. Gold is currently down more than 0.90%, trading at $2040 per troy ounce as of this writing.

Despite the fact that “a number of participants highlighted uncertainty around how long restrictive policy would need to be maintained,” the minutes indicate that the majority of Fed officials believe rates are likely at or near their top. Participants noted improvements in inflation, although essential services remain high. It should be noted that a number of participants may wish to maintain rates at present levels for a longer period of time than they now expect.

In light of these circumstances, gold fell to a fresh two-week low of about $2030.30 before rising $6.00 to $2036, however it is still trading at a loss of over 1%. The US dollar, as gauged by the US Treasury, decreased by two basis points at the same time, albeit it is still above the 3.90% mark.

Earlier, economic data revealed by the Institute for Supply Management (ISM) showed that Manufacturing activity remained at a recessionary level for 14 straight months, while the JOLTS report revealed by the US Department of Labor showed the jobs market is cooling down.

Meanwhile, expectations for rate cuts by the Fed remained unchanged for December 2024, with market players betting the US central bank would slash rates by more than 150 basis points.

Ahead of the week, the US economic docket will feature the ADP Employment Change report, followed by Initial Jobless Claims and Flash PMIs revealed by S&P Global; all the data will be announced by Thursday. After that, Gold traders’ focus will shift towards the December Nonfarm Payrolls report.

Even though the technical picture suggests the yellow metal remains bullish, a drop below the confluence of the October 27 cycle high of $2009.42 and the 100-day moving average (DMA) around that area would pave the way for testing the $2000 threshold. A breach of the latter would expose the December 13 swing low of $1973.13.