Gold (XAU/USD) fell about 0.80% on Tuesday (December 2nd) as traders appeared to be taking profits ahead of next week's Federal Reserve (Fed) monetary policy meeting, amid a strengthening US dollar. At the time of writing, XAU/USD was trading at $4,193, after hitting a daily high of $4,240.
XAU/USD weakened as traders unwound their positions ahead of next week's FOMC decision.
The optimistic market mood weighed on gold's safe-haven appeal, while the greenback, according to the US Dollar Index (DXY), held firm at 99.44, up 0.04%.
On Monday, the ISM Manufacturing Purchasing Managers' Index (PMI) came in weaker than expected in November, putting pressure on the Fed to reduce borrowing costs. Gold bullion prices also weakened due to hawkish comments from Bank of Japan (BoJ) Governor Kazuo Ueda, who stated that the bank is evaluating whether to raise interest rates at its next policy meeting.
Meanwhile, traders await the Fed's meeting on December 9-10, with a divided committee. On the dovish side, Fed Governors Christopher Waller, Stephen Miran, Michelle Bowman, and John Williams of the New York Fed are likely to be hawkish. On the hawkish side are Susan Collins of the Boston Fed, Jeffrey Schmid of Kansas City, Alberto Musalem of St. Louis, Austan Goolsbee of Chicago, and Governor Michael Barr.
Meanwhile, Fed Chair Jerome Powell, Vice Chair Philip Jefferson, and Governor Lisa Cook are neutral.
This week, gold traders will be looking ahead to the release of the ADP Employment Change report and the release of the Fed's favorite inflation gauge, the Core Personal Consumption Expenditures (PCE) Price Index, which will be released on Friday. (alg)
Source: FXstreet
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