Gold Prices Bounce on $4,300 Amid Mideast Tensions and Fed Meeting
Gold prices have briefly regained $4,300 early Tuesday as traders monitor escalating tensions in the Middle East and the upcoming US Federal Reserve monetary policy meeting.
The Fed's two-day meeting is expected to provide insight into future rate hikes, with a 92% probability of an increase this week. This has kept the US Dollar (USD) underpinned near weekly highs against major currency rivals, posing a risk for Gold's recovery.
Geopolitical tensions in the Gulf, driven by recent attacks on Saudi Arabia and Iraq's east-west pipeline, have intensified concerns over a regional conflict translating into higher Oil prices. This has contributed to the Dollar's strength, making it difficult for Gold to rebound.
Scotiabank strategists observe that swaps pricing indicating a 70% or higher risk of a Fed rate move has been a reliable indicator of policy decisions, which explains the Dollar's firm tone leading up to the FOMC meeting. However, they caution that an unchanged decision from the Fed would be a shock for markets and negative for the USD.
The Gold price technical analysis suggests a bearish near-term bias, with prices below the 21-day and 100-day simple moving averages while only modestly above the 50-day SMA.