Gold fluctuates narrowly around $4070, with the Federal Open Market Committee(FOMC) meeting minutes becoming a key catalyst

Current Trend: Gold Supported by Geopolitical Tensions and Weak US Dollar

Gold(XAU/USD) continued a moderate upward trend on Wednesday, attempting to break free from the previous day’s slight dip below the psychological level of 4000 USD. The overnight decline on Wall Street reflected market concerns about the US economic outlook, with fragile risk sentiment pressuring the US dollar bulls during Asian trading hours. Geopolitical risks stemming from the Russia-Ukraine conflict and economic uncertainties jointly supported the performance of safe-haven precious metals.

However, the upside potential of this rebound is noticeably limited. Market expectations for the Federal Reserve to continue cutting rates in December have significantly cooled, reducing the appeal of non-yielding assets like gold. Federal Reserve Vice Chair Philip Jefferson stated this week that the central bank needs to slow down its pace, and several officials remain cautious about policy adjustments in December, with only Governor Christopher Waller continuing to advocate for further rate cuts.

What is the FOMC? Why Is the Market So Focused on It?

The Federal Open Market Committee(FOMC) is the core decision-making body of the Federal Reserve, responsible for setting monetary policy direction. The committee’s meeting minutes disclose specific reasons behind rate decisions and the stance of committee members, serving as a key signal for traders to judge the Fed’s next move. Currently, the market’s focus is on whether the Fed believes the economy is strong enough to pause rate cuts.

Data Continues to Signal a Slowdown

According to US Department of Labor data, as of the week ending October 18, the number of people receiving unemployment benefits rose to 1.957 million, suggesting that the October unemployment rate may increase. This aligns with the trend of slowing hiring in the labor market. The US non-farm payroll report originally scheduled for September was delayed until Thursday due to the government shutdown. This data, along with tonight’s FOMC meeting minutes, will jointly influence market direction.

Geopolitical Tensions Add to Safe-Haven Bets

Ukrainian military announced on Tuesday that it used US ATACMS missiles to strike Russian military targets. Zelensky plans to visit Turkey to promote peace negotiations, but a Kremlin spokesperson stated that Russian representatives will not participate. Geopolitical risks continue to support precious metals. The historic US government shutdown still undermines economic confidence, reinforcing safe-haven demand for gold.

Technical Outlook: 200-Period Moving Average as a Bullish Lifeline

On the 4-hour chart, gold has rebounded supported by the 200-period exponential moving average(EMA), which is currently positioned ahead of the 4000 USD level. Short-term upside faces resistance at the 4100 USD round number. A successful break could trigger a rally towards the 4152-4155 USD resistance zone, aiming for 4200 USD.

On the downside, the 4037-4036 USD area acts as the first line of defense. If this level fails to hold the 200-period EMA and the 4000 USD mark, the decline could accelerate towards the 3931 USD support, ultimately approaching the late October low around 3886 USD. Oscillators need to maintain cautious signals before further upward movement.

Market Outlook

Traders are currently inclined to wait and see, awaiting directional signals from the FOMC meeting minutes and the postponed non-farm payroll report. The US dollar lacks strong buying support, and the Fed’s policy outlook has shifted to a cautious stance. These factors collectively provide a foundation for gold’s support, but insufficient rate cut expectations still limit further upside potential. The next 24 hours’ two major data events will redefine the momentum of the US dollar and gold.