Gold price is facing selling pressure for the second day in a row, largely due to a strengthening US Dollar. The lack of major developments in the Israel-Hamas conflict is also driving investors away from the safe-haven precious metal. However, the ongoing Middle East crisis and economic uncertainty are keeping investors cautious, which is evident from the generally weaker tone in equity markets. Additionally, expectations that the Federal Reserve is nearing the end of its tightening campaign and a decline in US Treasury bond yields are limiting losses for gold. Investor focus will remain on speeches by influential FOMC members, specifically Fed Chair Jerome Powell, to determine the future rate-hike path. Meanwhile, the release of US Trade Balance data may provide some trading impetus during the early North American session. The uncertainty surrounding the Fed’s next policy move is prompting short-covering around the US Dollar and putting pressure on gold. The softer US jobs report released on Friday supports the view that the Fed will maintain the status quo in December. Interestingly, Fed officials have made remarks suggesting that the current target interest rate is adequate and that under-tightening will not achieve the 2% inflation target. Chinese trade balance data shows a significant decline, indicating worsening overseas demand from Europe and the US. From a technical perspective, if gold price breaks below the support level of $1,970, it may accelerate its downfall towards the $1,954-1,953 area and further down to the 200-day Simple Moving Average (SMA) near $1,934. On the upside, immediate resistance is at $1,980, followed by the $1,991-1,992 region, the $2,000 psychological mark, and the post-NFP swing high around $2,004. The US Dollar shows varying percentage changes against major currencies, with the Swiss Franc being the strongest. The Federal Reserve shapes US monetary policy and has two mandates: achieving price stability and fostering full employment. It adjusts interest rates as its primary tool to achieve these goals. During its policy meetings, the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. Quantitative Easing (QE) and Quantitative Tightening (QT) are non-standard policy measures used during crises or low inflation. QE involves the Fed increasing credit flow by buying high-grade bonds from financial institutions, while QT involves the Fed stopping bond purchases.
