Gold remains depressed amid broadly firmer USD; eyes two-month low ahead of FOMC Minutes

Gold (XAU/USD) remains depressed on Wednesday, trading near its two-month low around $4,100. The resurgent US Dollar (USD) demand is a key factor behind the decline as traders anticipate insights from the upcoming FOMC minutes. Last week's US macro data showed moderating inflation and a slight cooling labor market, reducing pressure for the Federal Reserve to raise interest rates.

However, a 85% chance of a December rate hike is priced in by traders using the CME Group's FedWatch Tool. Strategists at BNY Markets caution that the recent reassessment away from an October Fed move does not signify a significant change in the near-term policy path. They expect the second rate hike of the year to occur towards the end of the year, but the outlook becomes murkier for the rest of 2027 due to the ongoing Middle East conflict, which continues to impact oil prices and inflation outlooks.

Geopolitical uncertainties and higher US bond yields are fueling safe-haven demand for the USD. Meanwhile, China's central bank has extended its gold buying streak for the 23rd consecutive month, but this development does little to boost gold prices amidst a bearish fundamental backdrop. Technical analysis indicates that the Gold price is below the 100-period Simple Moving Average and the 61.8% Fibonacci retracement, supporting the negative outlook.

Traders are advised to wait for a break below $4,100, the lower boundary of the trading range and the 78.6% Fibonacci retracement level, before positioning for further losses to a more significant structural floor at $3,938.