Gold stays in red below $1230 as dollar gathers strength ahead of Fed

• US Dollar Index recovers to mid-96s in the NA session.
• The U.S. T-bond yields support the greenback.
• The Fed is not expected to deliver any surprises in the rate statement.

Although the greenback suffered losses against its rivals following the midterm elections in the U.S., stock markets’ positive reaction suggested that the market sentiment actually improved to make it difficult for traditional safe-havens such as the precious metal  to find demand. After closing the previous three days with modest losses, the XAU/USD pair fell toward the $1220 area on Thursday and was last seen trading around $1225, where it was losing $2 on the day.

In the absence of significant macroeconomic data releases, the greenback started to recover its losses and received an additional boost from rising Treasury bond yields in the NA session. As markets are getting ready for the FOMC to announce its monetary policy decisions, the US Dollar Index is up 0.3% on the day at 96.45. Previewing the event,  “Given the Fed raised interest rates at the last meeting in September, today’s FOMC announcement will see a “no change” outcome, but the tone of the accompanying press release will point strongly to a December rate move,” ING analysts said.

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Earlier in the day, the only data from the U.S. showed that the weekly initial jobless claims came in at 214K for the week ending November 2 and met the market forecast.

Technical levels to consider

The initial support for the pair aligns at $1220 (daily low) ahead of $1212 (50-DMA/Oct. 31 low) and $1200 (psychological level). On the upside, resistances are located at $1227 (daily high), $1236 (Nov. 7 high) and $1243 (Oct. 26 high).