Gold (XAU/USD) traded with a negative bias for the third consecutive day, falling to a one-week low of around $4,170 early in the European session on Tuesday. This decline lacked a clear fundamental catalyst and could be attributed to some repositioning ahead of the highly anticipated FOMC policy meeting, which begins today.

Investors will continue to closely monitor the latest economic projections, including the so-called dot plot, and Federal Reserve Chairman Jerome Powell's post-meeting press conference for clues on the path of future interest rate cuts. This, in turn, will play a key role in influencing demand for the US Dollar (USD) and providing a fresh directional boost to the non-yielding yellow metal.

Meanwhile, strengthening expectations that the US central bank will lower borrowing costs this week and speculation of further rate cuts in 2026 limited the USD's recovery from its lowest level since late October, reached last week. Furthermore, ongoing geopolitical uncertainty stemming from the protracted Russia-Ukraine war could boost gold's safe-haven status and help limit further declines.

Furthermore, the rangebound price movement seen over the past week suggests investors should wait for a strong follow-through sell-off before positioning for further depreciation in the XAU/USD pair. Traders are now looking ahead to US macro data for support in the North American session. (alg)

Source: FXstreet