Gold Dips as USD Strengthens Ahead of FOMC Minutes
Gold prices faced renewed selling pressure during Wednesday's Asian trading session, retreating from a modest rebound seen earlier. The US Dollar gained strength ahead of the release of the Federal Open Market Committee (FOMC) meeting minutes, adding downward pressure on the non-yielding commodity.
Recent US economic data indicated easing inflation and a slight cooling in the labor market, reducing immediate pressure on the Federal Reserve to raise interest rates. However, traders are pricing in an 85% chance of a rate hike in December, according to the CME Group's FedWatch Tool. The upcoming FOMC Minutes are expected to provide insights into future rate hikes and policy metrics, which will influence both the USD and gold.
Geopolitical tensions in the Middle East and rising US bond yields bolstered demand for the safe-haven USD. Strategic developments along the Red Sea coast and attacks by Iran-backed Houthi groups added to market uncertainty. Meanwhile, China's central bank extended its gold-buying streak for the 23rd consecutive month, though this had little impact on gold prices amid bearish market conditions.
Technical analysis suggests a bearish consolidation phase for gold, with key support at $4,100 and resistance at $4,228. The Moving Average Convergence Divergence (MACD) indicates modest bullish momentum, while the Relative Strength Index (RSI) suggests vulnerability to further declines.