El oro fluctúa en torno a los 4070 dólares, y las actas de la reunión del Comité Federal de Mercado Abierto(FOMC) se convierten en el catalizador clave

Current trend: Gold supported by geopolitical tensions and a weak US dollar

Gold(XAU/USD) continued its moderate rise 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 clearly limited. Market expectations of a continued rate cut by the Federal Reserve in December have significantly cooled, reducing the appeal of non-yielding assets like gold. Fed 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 exactly 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 interest rate decisions and the stance of its 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 signals continue to slow down

According to US Department of Labor data, as of the week ending October 18, the number of people claiming 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 safe-haven premiums

Ukrainian military announced on Tuesday that they 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 demand for gold from risk-averse funds.

Technical outlook: 200-period moving average as a lifeline for bulls

Gold on the 4-hour chart is 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 breakout could trigger a rally towards the 4152-4155 USD resistance zone, aiming for 4200 USD.

On the downside, the 4037-4036 USD area forms the first line of defense. If the 200-period EMA and the 4000 USD level are broken, the decline could accelerate towards the 3931 USD support, ultimately approaching the late October low of 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 delayed non-farm payroll report. The US dollar lacks strong buying support, and the Fed’s policy expectations have shifted to a cautious stance. These factors together provide a foundation for gold support, but insufficient rate cut expectations still limit further upside potential. The next 24 hours’ two major data events will redefine the strength of the dollar and gold trends.