Range Bound Ahead Of FOMC

Gold is little changed, having kept to a tight ~$4 range across Asia-Pac dealing so far, operating a little above Tuesday’s session lows at writing.

• The precious metal has established a sideways trading range between ~$1,660 and $1,680 in recent sessions, consolidating above recently-made 29-month lows ($1,654.2 Sep 16 low) as we head into the FOMC decision later on Wednesday.
• Sep FOMC dated OIS continue to price in ~80bp of tightening, little changed from levels observed at the beginning of the week, pointing to ~20% odds of a 100bp rate hike at today’s meeting.
• Participants looked through a potential escalation in the Russia-Ukraine conflict on Wednesday as Russia moved to annex parts of occupied Ukraine, with ex-Pres. Medvedev reiterating Russian resolve to defend Russian territory, hinting at the possibility of a wider conflict and the use of nuclear weapons.
• From a technical perspective, gold remains in a clear downtrend, with last week’s extension lower reinforcing the bearish theme. Attention remains on support at $1,640.9 (Aug 8 2020 low), while initial resistance is seen at $1,688.9 (Sep 1 low).