Gold Price Analysis: XAU/USD climbs further beyond $1970, fresh 2-week tops ahead of FOMC
|- The heavily offered tone surrounding the USD underpinned the dollar-denominated commodity.
- Expectations of a dovish Fed further benefitted the non-yielding metal and remained supportive.
- The prevalent risk-on mood might keep a lid on further gains for the safe-haven precious metal.
Gold gained some follow-through traction during the early North American session and refreshed two-week tops, around the $1973 region in the last hour.
The US dollar prolonged its recent downward trajectory and remained depressed through the first half of the trading action on Wednesday. The bearish pressure picked up pace following the release of disappointing US Monthly Retail Sales figures, which, in turn, was seen as one of the key factors that benefitted the dollar-denominated commodity.
Data published by the US Census Bureau revealed on Wednesday showed that the headline sales rose by 0.6% MoM in August as compared to the 1% rise anticipated. Adding to this, the previous month's reading was also revised lower to 0.9% from 1.2% reported earlier. Meanwhile, sales excluding autos also missed expectations and grew 0.7% MoM.
Apart from a weaker USD, a softer tone surrounding the US Treasury bond yields – amid expectations of a dovish Fed – further drove flows towards the non-yielding yellow metal. However, the prevalent upbeat market mood, which tends to undermine traditional safe-haven assets, might keep a lid on any runaway rally for the precious metal.
Investors might also be reluctant to place any aggressive bets heading into the key central bank event – the latest FOMC monetary policy update. The Fed is scheduled to announce its policy decision later during the US session but the key focus will be on the updated economic projections. The so-called dot-plot will play a key role in determining the next leg of a directional move for XAU/USD.
Technical levels to watch
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