Gold: Sideways near support before FOMC – OCBC

Gold is hovering near support ahead of the Federal Open Market Committee (FOMC) meeting, according to OCBC strategist Christopher Wong. The precious metal rebounded following the release of the US Consumer Price Index (CPI), even as the data reinforced expectations of a Fed rate hike this week. This move came after 10-year US Treasury yields eased back from near-5% highs, while oil prices retreated from earlier peaks, helping to alleviate some of the inflation pressure that had been weighing on bullion.

Wong notes that elevated real yields remain a near-term hurdle, but stronger investment demand and central-bank buying provide a cushion. He retains a constructive medium-term bias, with the upcoming FOMC meeting being the key test to determine whether the recovery can extend or if the rates headwind reasserts itself. Bearish momentum remains on the daily chart, with the relative strength index (RSI) flat. Trading is likely to remain sideways until a clearer catalyst emerges.

Support levels are seen at 4270 (50 DMA) and 4000 levels, while resistance is at 4460 (21 DMA), 4540 (200 DMA), and the recent high of 4700. The AUD/USD pair touched a one-and-a-half-week low around the 0.7140 region in the Asian session but lacked follow-through. Spot prices for the currency pair are currently trading just above mid-0.7100s, down nearly 0.25% for the day.

The USD/JPY pair attracted some buyers at the start of a new week and climbed closer to the 154.00 mark in the Asian session, reversing part of Friday's losses. However, spot prices remain confined in a range held over the past week and within striking distance of a nearly seven-month low, touched last Tuesday, as traders await key central bank events.