Gold price hovers near $2,650 on Tuesday as traders remain cautious ahead of the Federal Reserve’s highly-anticipated policy decision. The precious metal struggles to gain traction amid expectations of a 25 basis points rate cut, with investors seeking further clarity from Fed Chair Jerome Powell’s comments and the updated dot plot. A hawkish tone from the central bank could weigh further on gold, limiting its upside potential in the near term.
Monday’s upbeat US economic data continues to pressure the non-yielding metal. S&P Global’s flash US Composite PMI surged to 56.6 in December, its highest level in nearly three years, driven by a stronger services sector. The robust figures reinforced speculation that the Fed could take a cautious approach to monetary easing, lifting US Treasury bond yields and strengthening the dollar, two factors that dampen gold’s appeal.
The US Dollar Index remains buoyant near 107.00, supported by rising bond yields, which hover at multi-week highs. A stronger greenback typically reduces gold’s attractiveness for non-dollar buyers, while elevated Treasury yields increase the opportunity cost of holding the non-yielding asset. This dynamic keeps the metal pinned near the lower end of its recent range despite lingering geopolitical uncertainties, including renewed US sanctions on North Korea and Russia.
Technically, gold faces immediate support near the $2,643 region, with a break below potentially exposing the $2,625 level. On the upside, resistance remains near $2,666, followed by the $2,677 mark. Traders now shift focus to the upcoming US Retail Sales data for fresh insights ahead of Wednesday’s Fed decision, which will likely dictate the near-term trajectory for XAU/USD.
