September 21, 2022 01:36 AM ET
By: AnalysisWatch
The price of gold (XAU/USD) remains on the sidelines as bulls and bears battle ahead of a key Federal Reserve (Fed) monetary policy announcement. However, the gold price remains under pressure near a one-year low and is down for a second consecutive day, with traders flirting with $1,660 ahead of Wednesday's European session.
However, the US Dollar Index (DXY) is recovering from its two-week high near 110.30, while benchmark Treasury yields are retreating from a multi-year high. It is worth noting that US two-year Treasury yields jumped to their highest level in 15 years, while their 10-year counterparts also rose to an 11-year high on Tuesday.
In addition to the Fed-related chatter, economic concerns in China and Russia are weighing on the XAU/USD price, with a new lockout at China's Tangshan steel hub led by COVID adding to the Asian Development Bank's (ADB) sour economic forecast, as well as the Sino-US tug-of-war over Taiwan and the first phase of a deal that appears to spell trouble for the dragon country.
Elsewhere, Russia's plans for occupied regions and the West's agitation for the same are also weighing on XAU/USD prices. Reuters reported that Moscow-installed officials in the occupied areas of four Ukrainian regions plan to hold referendums on joining Russia in the coming days, a call by the West that could sharply escalate the war and which has drawn condemnation from Ukraine and its allies. Along the same lines, headlines suggesting US senators' demand for secondary sanctions on Russian oil also appear to be challenging the market's appetite for risk.
Among these bets, S&P 500 futures remain under pressure near the previous day's two-month low, while Asian stocks are in the red.
Going forward, XAU/USD movement will depend on how the Fed manages to please traders by unveiling measures designed to tame inflation while causing less economic damage