Gold price stays firm on Monday as market awaits FOMC meeting – FXStreet

• Gold prices rose despite a slight rise in the US dollar following mixed PMI data.
• Investors are awaiting the Fed's rate decision and economic outlook, expecting a 25bps rate cut on Wednesday.
• Markets are speculating on the Fed's future monetary policy based on the possibility of inflationary pressure from Trump's policies.

Gold prices rose slightly in North American trading early in the week, gaining 0.28% as investors awaited the Federal Open Market Committee's (FOMC) decision. At the time of writing, XAU/USD is trading at $2,643, above its opening price but off the day's high.

The release of the S&P Global Flash PMI in December continued to brighten the US economic picture, but with mixed results. Business activity in the manufacturing sector weakened after improving last month, while the services sector recorded its highest reading in 2024.

The US dollar strengthened on the data, rising 0.07% to 107.01, according to the US Dollar Index (DXY). Meanwhile, bullion has fallen from its daily high of $2,664.

The US Federal Reserve will hold its last meeting of the year on December 17th and 18th. Estimates suggest the Fed will cut interest rates by 25 basis points (bp), but traders are keeping an eye on the release of the Summary Economic Projections (SEP) to get a sense of the situation. Interest rate path in 2025.

Low interest rates are typically a tailwind for non-yielding metals. However, with the incoming Trump administration hinting at an inflation-prone fiscal policy, there is growing speculation that the Fed may take a more lenient stance.

Gold prices tend to rise in environments of low interest rates and high geopolitical risk, but both have subsided recently.

U.S. economic data is scheduled to release retail sales, industrial production, FOMC policy decisions, and core personal consumption expenditures (PCE) price index.

Daily Digest Market Trends: Gold Price Steady Around $2,650

• Gold prices fell sharply, dropping 2 basis points to 2.049%, a tailwind for the precious metal, as real yields in the US came under pressure.
• The yield on the 10-year US Treasury note fell 2.5 basis points to 4.375%.
• The dollar index remained steady at 107.05.
• The S&P global manufacturing PMI for December fell to 48.3 from 49.7, below expectations of 49.8.
• The S&P Global Services PMI for the same period expanded from 56.1 to 58.5, beating expectations of 55.7.
• The CME Fedwatch tool suggests traders were pricing in a 96% chance of a quarter-point rate cut on Wednesday.
• Investors expect the Fed to cut interest rates by 100 basis points heading into 2025.
• Analysts at Goldman Sachs said the People's Bank of China “may even increase demand for gold during periods of weak local currency to boost confidence in the local currency.”

Technical Outlook: Gold Price Retreats, Sellers Focus on 100-Day SMA

Gold prices remain on an upward trend, but remain below last week's lows and the 50-day simple moving average (SMA) of $2,670. The Relative Strength Index (RSI) fell below the neutral line, indicating that sellers are in control.

If the gold price falls below $2,650, the next support will be at the 100-day SMA at $2,600. In case of further decline, the next stop would be the August 20th peak of $2,531. Conversely, if XAU/USD rises above $2,650, the next resistance level would be the 50-day SMA of $2,670 above $2,700.