Gold prices fall below $2,000 amid hawkish Fed signals

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Gold prices fall below $2,000 amid hawkish Fed signals
Credit: © Reuters.

Gold prices dipped below the $2,000 mark today as minutes from the Federal Reserve's latest meeting signaled a readiness to continue aggressive measures against inflation if necessary. This hawkish stance has prompted investors to exercise caution, despite some support for gold stemming from a weakened dollar after its recent rebound.

The Federal Open Market Committee (FOMC) minutes released on Tuesday hinted at a potential plateau in interest rate hikes, with market speculation about possible rate cuts commencing as early as May next year. This speculation has kept the USD's movements in check, even though it has recovered from its lows at the end of August against major currencies.

Despite failing to maintain its position above $2,000, gold is receiving mixed technical signals. Positive oscillators suggest there could be room for cautious optimism if gold can breach immediate resistance levels. Support is currently found between $1,991 and $1,990, with a risk of further declines toward weekly lows near $1,965 and critical zones around $1,938-1,939 as indicated by Simple Moving Average (SMA) benchmarks.

In other market movements, October's US Existing Home Sales dropped to a new low at a seasonally adjusted annual rate of just under four million units, indicating a cooling housing market. Meanwhile, geopolitical tensions in the Middle East have remained subdued following an agreement between Israel and Hamas on hostage/prisoner exchanges and short-term ceasefires. Additionally, US precision strikes on Iran-backed facilities in Iraq had a minimal impact on market sentiment or gold’s status as a safe-haven asset.

Investors are now looking ahead to upcoming US economic data releases for further guidance on market direction. These include Initial Weekly Jobless Claims and Durable Goods Orders. The revised Michigan Consumer Sentiment Index will also be closely watched to gauge consumer confidence amid prevailing economic challenges.

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