Gold Ticks Higher as USD Bulls Hold Their Breath Ahead of Fed Rate Decision
Gold prices have shown some signs of life, gaining traction near $4,275 as USD bulls take a breather ahead of the Federal Reserve's rate decision. The US Dollar had touched a two-week high but is now pausing for a moment, providing some support to gold.
The Fed is widely expected to raise interest rates by 25 basis points at its September 15-16 meeting, with traders focusing on the updated economic projections and dot plot. However, the outlook will be crucial in influencing USD price dynamics and provide a fresh directional impetus to non-yielding gold.
Energy-driven inflation risks are underpinning prospects for further tightening by the Fed, with crude oil prices shooting to a fresh high since May 20 amid growing concerns about supply disruption in the Middle East. This, combined with escalating tensions in the region and a surge in public and corporate borrowing, should continue to underpin the safe-haven USD.
From a technical perspective, gold has been showing resilience below the 50-day Simple Moving Average but momentum oscillators have softened, suggesting that upside traction is moderating. Any further move up could confront resistance at $4,413, followed by a stronger hurdle at $4,520, where prior supply could re-emerge.