XAU/USD tumbles after hitting daily high near $2000, eyes on Fed decision

• Gold price hits a daily high of $1996.73 but loses momentum in the aftermath of a mixed US inflation report.
• US Bureau of Labor Statistics (BLS) reveals disinflation in the US, with annual and monthly readings posting mixed results.
• Traders await the Federal Reserve’s decision, with money market futures expecting the Fed to hold rates, eyeing 100 basis points of rate cuts for 2024.

Gold price lost its bright after hitting a daily high of $1996.73, though it dropped in the aftermath of a softish inflation report in the United States (US), ahead of the upcoming Federal Reserve (Fed) monetary policy decision. The XAU/USD exchanges hands at $1979,40, down 0.11%

The yellow metal losses momentum ahead of the upcoming Fed’s decision

The US Bureau of Labor Statistics (BLS revealed the disinflation process in the US continues, as headline inflation was 3.1% YoY, below October’s 3.2%, but underlying inflation remains stickier at 4% in the twelve months to November. Monthly readings were mixed, with CPI standing at 0.1%, exceeding forecast by 0%, while core CPI was 0.3% as expected but higher than in October.

The data release underpinned Gold’s towards its daily high, though pared its gains, slumping below the $1985 mark, weighed by a recovery of US Treasury bond yields. Even though the Greenback (USD) remains soft as depicted by the US Dollar Index (DXY), down 0.23% at 103.85, the yellow metal remains unable to recover from its late losses.

Meanwhile, traders brace for the Federal Reserve’s decision on Wednesday, followed by Chairman Jerome Powell’s press conference. Despite inflation’s positive reading, money market futures had priced in 100 basis points of rate cuts for 2024 and remain cautious. Earlier in that day, the BLS would announce prices paid by producers.

XAU/USD Price Analysis: Technical outlook

Gold’s daily chart depicts the yellow metal is neutral to upward biased as long as it stays above the daily moving averages (DMAs). Nevertheless, as XAU/USD continues to drop, that would put into play the 50-DMA at $1966.41, followed by the 200-DMA at $1952.74. Further support lies at the 100-DMA at $1941.07. Once those levels are cleared, the XAU/USD would shift downwards. On the other hand, a bullish resumption looms, but bulls need to lift the spot price above the October 27 high at $2009.42.