Gold price (XAU/USD) has corrected sharply after failing to recapture the critical resistance of $1,930.00 in the Asian session. The precious metal has witnessed a loss in the upside momentum as the US Dollar Index (DXY) is showing signs of recovery after dropping to near 101.70. The USD Index is gaining traction as investors are getting anxious ahead of the interest rate decision by the Federal Reserve (Fed).
The correction in the Gold price seems mild as Fed chair Jerome Powell is expected to further decelerate the pace of the interest rate hike. Meanwhile, S&P500 futures have eased some gains recorded on Tuesday as investors believe that further interest rate hikes by the Fed will escalate recession fears in the United States. The 10-year US Treasury yields have dropped below 3.52%.
Apart from the Fed’s monetary policy, US Automatic Data Processing (ADP) Employment data and ISM Manufacturing PMI will be of utmost importance. As per the consensus, the US economy has added fresh 170K jobs in January from the former release of 235K. While the Manufacturing PMI is expected to decline to 48.0 against 48.4 released earlier.
For a longer horizon, Reuters noted that higher interest rates by the Fed will limit the Gold price ahead. According to the Reuters poll, Gold price is expected to average $1,852.50 in 2023 and $1,890 in 2024.
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