Gold slides below $1950 amid some repositioning trade ahead of FOMC

Gold edged lower during the early North American session and refreshed daily lows, around the $1942-41 region in the last hour.

Following the previous day's intraday volatile swings, the precious metal was seen oscillating in a range through the major part of the trading action on Wednesday. Investors preferred to wait on the sidelines ahead of the highly anticipated FOMC monetary policy update, scheduled to be announced later during the US session.

The Fed is anticipated to keep its policy measures unchanged, though expectations of a dovish shift extended some initial support to the non-yielding yellow metal. Worries that the resurgence in coronavirus cases could undermine the US economic recovery have been fueling speculations that the Fed will add more stimulus.

This, in turn, was seen as one of the key factors that continued exerting pressure on the US dollar and further underpinned the dollar-denominated commodity. The US dollar was also pressured by the impasse over the next round of US fiscal stimulus measures. In fact, the US President Donald Trump noted on Wednesday that his administration and Democrats are still far apart on the coronavirus relief bill.

Despite the supporting factors, the upbeat market mood – as depicted by a strong opening in the US equity markets – weighed on the precious metal's safe-haven status and exerted some pressure. Heading into Wednesday’s key event risk, some repositioning trade further collaborated the latest leg of a sudden fall witnessed over the past hour or so.

Technical levels to watch