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Gold prices (XAU/USD) initially surged after a bullish gap opening, but the Federal Reserve's (Fed) hawkish stance pressured the market, leading to a third consecutive weekly decline. The Fed's signals of prolonged high interest rates and inflation control efforts weakened gold's appeal as an inflation hedge. Traders are now assessing whether the Fed will maintain its aggressive posture in upcoming meetings.
The Fed's monetary policy remains the dominant factor for gold, as higher rates increase opportunity costs for non-yielding assets like gold. This week's losses highlight the metal's vulnerability to central bank decisions, with the 1,900 level acting as immediate support. Market participants are closely watching the Fed's upcoming economic projections and employment data for further clues.
For Gulf investors, the Fed's policy trajectory will continue to dictate gold's direction. A sustained hawkish stance could push prices below key support levels, while any dovish shift might trigger a rebound. Traders should monitor the Fed's December meeting minutes and U.S. inflation data for potential turning points.
