- Gold price is finding it difficult to build on the gains it secured over the preceding two trading sessions.
- Increased optimism surrounding the resumption of US-China trade discussions is currently exerting downward pressure on the safe-haven asset.
- Market participants are now keenly awaiting the forthcoming Federal Open Market Committee (FOMC) policy announcement for a clearer directional signal.
The Gold price (XAU/USD) experienced significant selling pressure during Wednesday’s Asian trading session, effectively halting a two-day upward trend that had propelled it to a two-week peak in the vicinity of $3,434-3,435, levels attained the day before. The improvement in global risk appetite stems from the announced US-China trade talks scheduled to take place in Switzerland this week. Consequently, this development is diminishing the appeal of the safe-haven bullion, and, coupled with a slight strengthening of the US Dollar (USD), is contributing to the current intraday decline. As of the latest trading, spot gold is trading near $3,420, down approximately 0.4% on the day.
However, it is important to acknowledge that the US-China trade negotiations are anticipated to be intricate, and the achievement of a comprehensive and lasting trade agreement is expected to be a protracted process. This inherent complexity may limit the extent of market optimism and, in conjunction with ongoing geopolitical uncertainties, could provide underlying support for the Gold price. Furthermore, USD bulls may prefer to remain on the sidelines, awaiting the outcome of the two-day FOMC meeting, which concludes later today. The market widely expects the Federal Reserve to hold interest rates steady at this meeting, but investors will be scrutinizing the accompanying statement and press conference for clues about the future path of monetary policy. This cautious stance further justifies restraint in placing aggressive bearish bets on the non-yielding Gold price. Recent economic data, including inflation figures, have added to the uncertainty surrounding the Fed’s next move, making the FOMC’s communication particularly crucial.
