Gold (XAU/USD) remained in a rangebound mode for the second consecutive session, despite its underlying bullish bias. The precious metal traded within the tight range between $1,740 and $1,720, following a decent rebound from the $1,700 psychological support.
The US government bond yields also traded in a sideways momentum, while the Dollar Index (DXY) remained rangebound below the crucial 92.00 level, ahead of the FOMC meeting on Wednesday. That said, gold will also maintain a sideways momentum ahead of tomorrow’s event, considering that it takes its trading cues from these two investment vehicles.
Meanwhile, today’s economic data release—US Retail Sales and Industrial Production—failed to make a dent in gold’s price dynamics, despite the data coming in worse than expected. Analysts assert that poor weather conditions were likely responsible for the drop in production in the US. They added that global supply shortages could also be a reason for the decline and noting that it could persist for a while.
Apart from the FOMC event scheduled for tomorrow, there are other major gold-sensitive events slated for Thursday, including the BoE interest rate and comments for ECB President Christine Lagarde. Gold traders will also be taking clues from the results of these events.
Wednesday’s FOMC Meeting
In tomorrow’s FOMC monetary policy decision, the bank is likely to keep interest rates its current rate (0.25%) and rate of asset purchases at $120 billion per month.
The Fed will also be releasing new economic projections, which will be intently monitored by traders considering that officials have echoed the possibility of an inflation hike in the short-term.
Moving on, market participants will be keeping an eye out for information about when or if the Fed could respond to further increases in US government bond yields.
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