Gold News: XAU/USD Edges Higher as Markets Await Fed Decision and Key US Data

Gold Edges Higher as Markets Await Fed Decision and US Economic Data

Gold prices moved slightly upward on Tuesday as investors anticipate the Federal Reserve’s commentary on monetary policy and upcoming U.S. economic data. These factors are expected to provide insights into the pace and scale of potential Fed interest rate cuts.

At 10:51 GMT, XAU/USD is trading $2390.42, up $6.63 or 0.28%.

XAU/USD at Crucial Pivot Point

The XAU/USD pair has been hovering around a key pivot level of $2380.54 for the past four trading sessions. Trader reaction to this level may determine the short-term direction of gold prices.

Fed Meeting in Focus

The Federal Reserve is expected to maintain current interest rates at the conclusion of its two-day meeting on Wednesday. However, the central bank may signal potential policy easing as early as September, citing inflation approaching its 2% target. Investors will be closely monitoring Fed Chair Jerome Powell’s press conference for any clues regarding the timing of potential rate cuts.

Treasury Yields and Economic Data

U.S. Treasury yields remained relatively stable on Tuesday as investors turned their attention to upcoming economic data and the Fed meeting. Key labor market data, including JOLTs job openings figures and the July jobs report, are scheduled for release this week. These reports, along with consumer confidence insights, will provide crucial information about the state of the U.S. economy.

Gold Demand Trends

While India’s gold demand in the June quarter fell 5% year-over-year, consumption in the second half of 2024 is expected to improve due to local price corrections following import tax reductions. However, record-high international prices have impacted global consumer demand, with bar and coin demand falling 5% and jewelry demand dropping 19% year-on-year.

Market Forecast

The short-term outlook for gold appears cautiously bullish. Potential signals from the Fed regarding rate cuts and expected slowdown in job additions could catalyze further investment demand for the precious metal. However, traders should remain vigilant as market reactions to economic data releases and Fed commentary may introduce volatility in the coming days.

Technical Analysis

Gold (XAU/USD) is currently showing a slight bias to the upside. Not only did traders defend the medium-term uptrend last week with a successful test of the 50-day moving average at $2358.70, but it has also jumped to the strong side of a key pivot at $2380.54. Despite holding these two support levels, prices aren’t likely to rise much without a catalyst.

Gold could rally this week as long as support holds and the Fed provides the firepower for a surge. Prices could remain rangebound if the Fed agrees with the market on September rate cut, but remains uncertain on a similar move in December. Sentiment could turn bullish if the Fed hints at December rate cut. If the Fed disappoints then traders will challenge the 50-day MA again.