The FOMC monetary policy decision at 7:00 pm BST is a key event of the day. Monetary policy settings, like interest rates or size of asset purchase programmes, are expected to be left unchanged. Having said that, market attention will be on forward guidance as well as how far have taper discussions went so far. Should Powell provide any more precise timing for scaling down of the balance sheet, USD may benefit and precious metals may find themselves under pressure. However, it should be noted that this is not the base case scenario. It looks more likely that US central bankers will use the recent jump in coronavirus cases to stress the need for keeping monetary stimulus in place. Powell's presser at 7:30 pm BST is likely to attract more market attention than the policy statement at 7:00 pm BST.
Taking a look at the gold market, we can see that price of the precious metal has halted downard correction at a support zone ranging between $1,800 mark and the 50% retracement of the upward impulse launched in March 2021. The nearest resistance to watch can be found ranging above 38.2% retracement. It is additionally being strengthened by 50- and 200-session moving average, as well as previous price reactions. Should Fed hit a hawkish note today, gold may drop below $1,800. In such a scenario, attention will shift to support at 61.8% retracement ($1,765 area).
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Source: xStation5
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