The current price of XAU/USD is 1,980.81. The US Core Consumer Price Index remained steady at 4% Year over Year in November. The Federal Reserve is set to announce its decision on monetary policy, and XAU/USD is expected to extend its decline in the near term, with caution prevailing ahead of the Fed’s announcement.
Gold prices saw little change on Tuesday, with XAU/USD hovering around $1,980.00. The US Dollar had a soft tone at the start of the day, as Asian equities performed well, pushing investors away from the safe-haven currency. However, caution prevailed ahead of the release of the US Consumer Price Index (CPI), which came in as expected, with the monthly CPI up 0.1% and the annual one at 3.1%.
XAU/USD briefly rose to $1,996.68 in response to the CPI news but quickly changed course as the Greenback trimmed losses. Investors are now anticipating the Federal Reserve’s monetary policy decision, expected to be announced on Wednesday. The central bank is expected to keep rates on hold for a third consecutive meeting, but investors are looking for clues on when policymakers will start cutting rates, given the steady inflation.
From a technical outlook, XAU/USD is showing a downside risk in the near term, with the 20 Simple Moving Average (SMA) standing above the current level on the daily chart. On the 4-hour chart, XAU/USD retreated from around a flat 200 SMA, indicating room for a potential slump in the near term. Support levels are at 1,976.26, 1,959.40, and 1,946.00, while resistance levels are at 1,994.40, 2,001.70, and 2,014.20.
Additional insight: The upcoming Federal Reserve announcement is key for the direction of XAU/USD in the coming days. Traders will be closely monitoring the language used in the announcement and any indications about future rate cuts, which could have a significant impact on gold prices. The technical indicators also suggest a potential downside risk for XAU/USD in the short term, but the market reaction to the Fed’s decision will be a major driver for gold’s movement.
