Gold Price Forecast: XAU/USD drops after Fed Minutes, Dollar hits new highs

• Gold falls to two-week low after Fed minutes show no dovish stance, despite acknowledging inflation progress.
• The XAU/USD pair loses more than 1%, while the Dollar Index rises 1.11%, reflecting the good performance of the Dollar.
  Markets are watching upcoming US ADP employment data, jobless claims, and PMIs, with attention on the December nonfarm payrolls report.

The price of Gold fell during the last hour on Wednesday after the US Federal Reserve (Fed) published the minutes of the December meeting, which did not give any dovish signs. Therefore, the Dollar rose again and hit a new 11-day high before pulling back a bit. At the time of writing, the XAU/USD pair is trading at $2,040 per troy ounce, down more than 0.90%.

Gold prices will remain pressured as Fed officials did not talk about rate cuts

The minutes suggest that most Fed officials consider rates likely to be at or near their peak, although “a number of participants highlighted uncertainty over how long it would be necessary to maintain tight policy.” Although participants noted progress in inflation, basic services remain high. It must be said that several participants may want to keep rates at current levels longer than expected.

Against this backdrop, Gold plummeted to a new two-week low around $2,030.30 before jumping $6.00 to $2,036, but is still trading with losses of over 1%. At the same time, the yield on the 10-year US Treasury Bond fell two basis points, although clinging to the 3.90% threshold, while the US Dollar (USD), as measured by the US Dollar Index (DXY), gained 1.11% and stands at 102.45.

Previously, economic data revealed by the Institute of Supply Management (ISM) showed that Manufacturing activity remained at a recession level for 14 consecutive months, while the JOLTS report revealed by the US Department of Labor. showed that the job market is cooling.

Meanwhile, expectations for rate cuts by the Fed remained unchanged for December 2024, with market players betting that the US central bank would cut rates by more than 150 basis points.

On the US economic agenda will be the ADP employment change, followed by initial unemployment claims and the Preliminary PMIs revealed by S&P Global; All data will be released on Thursday. Afterwards, Gold traders will focus on the December Non-Farm Payrolls report.

XAU/USD Price Analysis: Technical Outlook

Although the technical picture suggests that the yellow metal remains bullish, a drop below the confluence of the October 27 cycle high at $2,009.42 and the 100-day moving average (DMA) around that area would pave the way for the way to test the $2,000 threshold. Exceeding this last threshold would expose the cycle low of December 13 at $1,973.13.