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  • Gold corrects further to the downside on Wednesday, before the FOMC minutes as dollar gathers strength.
  • XAU/USD drops to lowest in two days, down $40 from Tuesday’s close.

Gold corrected further to the downside during the American session amid a stronger US dollar across the board as market participants got ready for the FOMC minutes.

The yellow metal fell to a two-day low at $1,953/oz before bouncing modestly to the upside. As of writing, it trades at $1,964; losing $40 so far. XAU/USD continues to retreat after hitting on Tuesday at $2,015.80 the strongest level in a week.

The slide in gold took place as the greenback gained momentum. The dollar hit fresh high against G10 currencies pushing the DXY above 92.60. The index is rising after falling during five consecutive days. The Swiss franc and the yen also accelerated to the downside during the last hour.

At 18:00 GMT the Federal Reserve will release the minutes of the July meeting. Back then, the central bank kept the monetary policy stance unchanged as expected.

Joseph Trevisani, Senior Analyst at FXStreet points out the minutes could provide clues to future Fed decisions. “Yield curve control, or as we like to call it Y2C, the extension of Fed rate setting to the longer end of the yield curve. Was there a serious discussion of Y2C as the next step in Fed policy?”. Trevisani notes that it the minutes mention Y2C, it will be negative for the US dollar. A decline of the dollar could trigger a rally in gold.

Technical levels