First Weekly Decline In Six Ahead Of FOMC Decision

Gold is 0.5% lower in the Asia-Pacific session, after closing 0.2% higher at $2337.96 on Friday.

• Despite this, the price of gold closed approximately 2% lower for the week, marking its first weekly decline in six weeks.
• This occurred ahead of the FOMC’s Policy Decision scheduled for Wednesday, where policymakers are anticipated to reiterate their commitment to maintaining higher interest rates for an extended period.
• In the US short-term interest rate market, expectations have shifted, with projections now suggesting only one Federal Reserve rate cut for the year. This forecast is notably lower than the approximately six quarter-point cuts that were anticipated at the beginning of the year.
• Historically, gold tends to react negatively to higher interest rates due to its lack of yield-bearing characteristics.
• According to MNI’s technicals team, gold is in consolidation mode. The piercing of the 20-day EMA last week could be the start of a possible corrective cycle. A continuation lower would signal scope for an extension towards $2229.4, the 50-day EMA.