Gold slips on profit-taking as investors watch for Fed rate-cut clues

Gold trading was subdued on Monday as investors looked ahead to this week’s Federal Reserve meeting, with confidence building that the central bank will deliver a quarter-point cut on Wednesday.

Soft recent data including weaker private payrolls and signs of cooling in the labor market have further cemented expectations for policy easing.

Spot gold was quoted at $4,185.45 per ounce by 1915 GMT.

The delayed release of the U.S. core Personal Consumption Expenditures (PCE) index, the Fed’s preferred inflation measure showed only a modest monthly increase, with the annual rate continuing to edge lower.

However, gold’s upside has been capped by mixed messaging from Fed officials in recent weeks, with some warning against cutting rates too soon. This division has clouded the policy outlook and raised the risk of a surprise stance from the central bank. Traders are now looking to Wednesday’s decision and Chair Jerome Powell’s press conference for clearer confirmation that an easing cycle is underway.

CME FedWatch:

·         CME FedWatch December rate cut probabilities have moved higher to 87.4%.

·         January rate easing probabilities have risen to 67.5%.

Technical analysis perspective:

Gold / US Dollar:

·         Spot gold is testing horizontal resistance in the $4,259–$4,264 area.

·         A pullback toward $4,100 is likely if prices fail to clear this barrier.

·         The $4,100 zone is expected to hold, setting the stage for another move back toward $4,260.

·         A decisive break above $4,264/65 would negate the bearish scenario. 

Gold Daily chart:

GLD (SPDR Gold Trust) ETF:

·         GLD is trading just below horizontal resistance in the 390–391 area.

·         While this ceiling holds, a pullback toward the rising trendline near 381 is in view.

·         From there, a rebound back toward 390–391 is likely.

·         A decisive break above 390–391, or a clean break below 381, would determine the next directional move.

GLD daily chart:

GLD Seasonality:

Since 2006, GLD has posted December rise of 0.7% in 60% of the years, while January has seen a rise of 3.6% in 70% of the years.