• Gold price pares the biggest daily gains in eight days inside a bullish chart pattern.
• Pre-Fed anxiety and firmer yields weigh on the XAU/USD prices.
• Gold bears can cheer Fed’s 75 bps rate hike in absence of signals favoring a slower lift to rates in December.

Gold price (XAU/USD) remains sidelined around $1,648, mildly offered, after witnessing an upbeat start to the week, as traders await the all-important Federal Open Market Committee (FOMC) verdict on Wednesday.

While the US dollar’s struggle offered a good November start to gold, after a seven-month downtrend, the market’s anxiety ahead of the key Fed meeting and the US dollar’s recent pick-up appears to challenge the bulls of late.

That said, the US Dollar Index (DXY) grinds near 111.50, following an initial slump to 110.70, as firmer US data and a recovery in the Treasury yields recalled the greenback buyers.

The US JOLTS Job Openings increased to 10.717M in September versus the 10.0M forecast and upwardly revised 10.28M previous readings. Further, US ISM Manufacturing PMI increased to 50.2 in October versus 50.0 market forecasts and 50.9 prior. On the same line, final readings of the US S&P Global Manufacturing PMI for October rose past 49.9 initial forecasts to 50.4 but stayed below 52.0 readings for the previous month.

In addition to the firmer US data, the increasing hawkish Fed bets also weigh on the XAU/USD prices due to the metal’s inverse relationship with the US dollar. Recently, the CME’s FedWatch Tool printed an 85% chance of the Fed’s 75 bps rate hike in today’s monetary policy meeting.

Against this backdrop, Wall Street closed in the red despite a firmer opening while the US Treasury yields are firmer around 4.05%, suggesting the risk-off mood, which in turn probed the XAU/USD bulls.

It’s worth noting, however, that the indecision over the policymakers’ verdict on the rate increases from December appears the key catalyst to watch for the metal traders as the 75 bps rate lift is already priced-in and makes no major difference. As a result, Fed Chair Powell’s press conference and the US central bank’s ‘dot-plot’ will be crucial to watch for fresh impulse.

Also read: Fed November Preview: Is it time for a dovish signal?

Technical analysis

Gold price portrays a one-week-old falling wedge bullish formation on the four-hour chart. The hopes of an upside move also take clues from the recently bullish MACD signals and firmer RSI (14).

However, the 100-EMA and the 200-EMA, respectively around $1,655 and $1,668, act as additional upside filters to watch for the XAU/USD bulls before aiming the theoretical target of $1,700.

Meanwhile, the stated wedge’s lower line, around $1,630 by the press time, restricts the metal’s immediate downside.

Following that, the lows marked in October and September, close to $1,617 and $1,615 in that order, will challenge the gold bears ahead of the 61.8% Fibonacci Expansion (FE) of October 04-26 moves, near $1,605, quickly followed by the $1,600 threshold.

Gold: Four-hour chart

Trend: Limited upside expected