Gold price maintains recent gains ahead of FOMC meeting

The Gold Index (XAU/USD), which is up by 0.40%, has soared to the $1,930s territories. In anticipation of this week’s central bank decisions, markets are still cautious. The metal’s potential is constrained by still-high US yields.

On Monday, the current price of gold is remaining above the convergence of the 20 and 200-day Simple Moving Averages (SMA) around $1,922-1,923, increasing to $1,930. The price of the precious metal is currently up by 0.42%, trading at $19,31.54 per ounce.

Markets remain cautious ahead of the Fed in the United States, and the Bank of England in the UK as well as the Bank of Japan, where the British bank is the only one expected to hike rates.

In line with that, similar to the European Central Bank last week, the BoE is expected to deliver a dovish 25 basis point hike, highlighting stagflation risks. Likewise, investors are discounting that the BoJ will maintain its ultra-dovish stance.


On the Fed’s side, it is widely expected to deliver a hawkish pause and try to convince markets that it isn’t the end of the tightening cycle. For the November and December meetings, investors are placing some bets for one last hike as economic activity remains strong while the labour market sees a mixed outlook. In addition, the Fed will release updated dot plots and fresh macro forecasts.

In the meantime, US Yields, often seen as the opportunity cost of holding Gold, are trading mixed but remain high, limiting the XAU/USD upside. The 10-year bond yield is 4.33%, with mild losses on the day. The 2-year yield stands at 5.06%, up by 0.50%, and the 5-year yield is at 4.45%, down by 0.30%.

Considering the daily chart, XAU/USD presents a neutral to bullish outlook, with the bulls showing resilience and gaining momentum.

The main event for the marketplace this week will be the Federal Reserve’s Open Market Committee (FOMC) meeting that begins Tuesday morning and ends Wednesday afternoon with a statement and press conference from Fed Chairman Jerome Powell. Most look for the FOMC to stand pat on U.S. monetary policy, but still sound a hawkish tone. A Barron’s headline today reads: “Strikes, dot plots, energy prices. How the Fed’s inflation battle is getting tougher.”

Asian and European stocks were mostly weaker overnight. US stock indexes are pointed to firmer openings when the New York day session begins. The key outside markets today see the U.S. dollar index slightly weaker. The benchmark U.S. Treasury 10-year note yield is presently fetching 4.345%.