GOLD PRICE FLAT-LINES ABOVE ONE-WEEK LOW, AWAITS THE CRUCIAL FED DECISION ON WEDNESDAY

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  • Gold price oscillates in a range and is influenced by a combination of diverging forces.
  • Hawkish Fed expectations, elevated US bond yields and a bullish USD cap the upside.
  • Geopolitical risks lend some support to the XAU/USD ahead of the key FOMC meeting.

Gold price (XAU/USD) struggles to capitalize on the previous day's bounce from the $2,145 region, or over a one-week low and oscillates in a range during the Asian session on Tuesday. The robust US consumer and producer inflation figures released last week fuelled speculations that the Federal Reserve (Fed) could modify its forward guidance to two 25 basis points rate cuts in 2024 instead of the three projected previously. This, in turn, remains supportive of elevated US Treasury bond yields, which underpin the US Dollar (USD) and act as a headwind for the non-yielding yellow metal.

The markets, however, are still anticipating that the Fed will begin its rate-cutting cycle as early as the June policy meeting. This, combined with ongoing geopolitical tensions, might continue to provide a floor to the Gold price and help limit the downside. Traders might also prefer to wait on the sidelines ahead of the crucial two-day FOMC monetary policy meeting starting this Tuesday. The Fed is scheduled to announce its decision on Wednesday and investors will look for fresh cues about the rate-cut path, which will play a key role in driving the USD and provide a fresh impetus to the precious metal.


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