Gold Prices Hover Below $2,000 Following Fed Rate Hike Expectations

Gold prices (XAU/USD) briefly dipped to $1,990 before rebounding to a new daily high in the early European session. However, they remain below the $2,000 psychological level, influenced by expectations that the Federal Reserve (Fed) may consider an additional 2023 rate hike to achieve its 2% inflation target. This more hawkish stance is boosting US Treasury yields, revitalizing the US Dollar (USD), and possibly capping gold's gains, given its lack of yield.

Israel's measured action in Gaza has reduced concerns about a broader crisis in the Middle East and diminished gold's appeal as a safe haven. However, the risk of a further escalation of the conflict between Israel and Hamas and uncertainty about China's economic recovery continues to generate buying interest in gold around the $1,990 level. The emergence of dip buying urges caution before a significant correction is expected.

Traders may also stay on the sidelines ahead of a two-day FOMC monetary policy meeting starting this Tuesday. The Fed is expected to announce its decision on Wednesday, likely keeping interest rates between 5.25% and 5.50%, the highest in 22 years. Investors will closely monitor hints about future rate hikes, impacting the USD and potentially guiding gold prices. Meanwhile, Tuesday's US economic data releases may influence market sentiment.

Gold has reached the 2006 resistance level and is now trending towards the 2000 resistance level. The bullish momentum remains strong, and gold may continue to rise to the next resistance level in 2020.

Resistance 3	Resistance 2	Resistance 1	Support 1	Support 2	Support 3
2040	2020	2006	2000	1947	1920