Gold Prices Under Pressure Ahead of Fed Decision and Trump-Xi Meeting in Korea
Global gold prices experienced pressure on Tuesday (October 28th), amid a combination of global factors that created market uncertainty. Investors await the outcome of the Federal Reserve's (The Fed) monetary policy decision and developments from the meeting between US President Donald Trump and Chinese President Xi Jinping in South Korea.
Fundamentally, gold prices (XAU/USD) were pressured by a strengthening US dollar and increased investor risk appetite following positive signals from US-China trade relations. A meeting in Malaysia last week between officials from both countries resulted in an initial agreement on increased technology and trade cooperation, which was welcomed by global markets.
However, investor attention remains focused on the Fed's decision on interest rates. Markets expect the US central bank to signal an initial rate cut in the coming months, although some officials continue to emphasize that inflation is not yet fully under control. "We will remain data-dependent and are not yet in a position to confirm a looser policy path," said Fed Governor Michelle Bowman in a statement, as quoted by Bloomberg.
Meanwhile, analysts from JPMorgan stated that if the Fed adopts a more dovish stance, gold prices could potentially strengthen again, as expectations of an interest rate cut would depress US bond yields. Conversely, if the Fed's statement remains hawkish, pressure on gold is likely to continue.
Technically, gold prices are currently hovering around a key support area at US$3,950 per troy ounce. A break below this level could push the price towards US$3,900–US$3,800. However, if a rebound occurs, the nearest resistance area is in the US$4,040–US$4,050 range.
Analysts from FXStreet noted that high volatility will continue to cloud gold's movements ahead of the Fed's decision and the Trump–Xi meeting. "The combination of geopolitical issues and monetary policy makes the gold market highly sensitive to major news in the coming days," the report stated.
With market sentiment still mixed, some traders are choosing to wait for confirmation of the Fed's direction before taking large positions. If the Fed confirms its interest rate cut plans, gold could potentially rebound. However, if the central bank maintains a tighter stance, the pressure could persist into the weekend.
Source: Newsmaker.id
