• Gold bears move in as the Fed two-day meeting gets underway. 
• Bulls could see an opportunity from deeper down in the meantime. 

The gold price edged lower on Tuesday as the US dollar and yields climbed in anticipation of the outcome of the two-day Federal Open Market Committee meeting that got underway today. At the time of writing, gold is trading at $1,664.30 down 0.68%, losing ground from the highs of $1,679.51 to a low for the day of $1,660.10, so far. 

The opportunity cost of holding zero-yield precious metals has been removed by the sentiment surrounding this week's slew of central banks meeting, with the Fed being the centerpiece event. At the same time, the greenback remains close to two-decade highs, making greenback-priced bullion more expensive for overseas buyers. 

The US dollar has been particularly perky on Tuesday, trading near a two-decade high, as investors held firm on the expectation of another aggressive rate hike by the Federal Reserve. Rate futures traders are pricing in an 81% chance of a 75 basis point hike and a 19% probability of a 100 bps in tightening.

This is supporting US yields and the DXY index that is now not far from 110.79, a level hit earlier this month for the first time since June 2002. Risk-off sentiment has also contributed to a higher US dollar in the face of the aggressive tightening path that global banks are on as they try to contain uncomfortably high inflation. 

Fed outlook

''We expect the FOMC to deliver its third consecutive 75bp rate hike, bringing the policy stance decidedly above its estimate of the longer-run neutral level,'' analysts at TD Securities said.

''We also look for the Committee to provide more hawkish signals through the update of its economic projections and for Chair Powell to build on his Jackson Hole message.''

As far as Treasury yields go, the analysts said that they should respond to the ''size of the hike, the 2023/2024 dots, and Powell's tone on further tightening. Given the hawkish market positioning, a "sell the rumor, buy the fact" reaction is possible.''

And for the greenback, they argued that a ''buy the rumor, sell the fact is a tempting play for the USD,'' but the analysts say that they are wary that the messaging at this meeting will be more hawkish than usual.

''Neutral bias and reassess after.''

Gold technical analysis

As for the technical outlook, the price is running deeper towards a key support area that could come under pressure over the meeting and outcome.

The weekly charts show the prospects of a move lower prior to the next bullish phase that precedes a downside extension.  Below, the daily chart's M-formation is a reversion pattern and the correction is already underway: