Gold ended up closing the week in negative territory below $1,650. XAU/USD needs a dovish Fed to ditch bears, FXStreet’s Eren Sengezer reports.
“The Fed is widely expected to raise its policy rate by 75 bps to the range of 3.75%-4%. Markets are pricing in a 51.5% probability of the Fed hiking its policy rate by a total of 125 bps by end-2022. The market positioning demonstrates that the dollar has more room on the downside in case investors are convinced that the Fed will opt for a 50 bps hike in December. In that scenario, XAU/USD is likely to gather bullish momentum alongside falling US yields. On the other hand, risk traders are likely to be disappointed in case the US central bank shows no intentions of a policy pivot and seek refuge in the dollar. That would likely be a significant bearish development for gold and open the door for an extended decline.”
“The US Bureau of Labor Statistics will publish the October jobs report on Friday. Investors forecast Nonfarm Payrolls (NFP) to rise by 200K. The market reaction to the past few NFP releases had been straightforward with strong prints helping the dollar outperform its rivals and vice versa. A similar response could be witnessed ahead of the weekend.”
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