The recovery in gold prices from August lows is gaining momentum. On Wednesday, the precious metal has extended weekly gains to fresh mid-July highs marginally above $1,251 and holds in the positive territory, expecting fresh short-term drivers.
It looks like gold is shining again, after a break of the aggressive bearish trend. The bullion’s appeal is rising due to a sell-off in the greenback as the American currency is on the defensive across the board amid the growing doubts in the Fed’s ability to proceed with monetary tightening in 2019. In this context, today’s FOMC meeting will define further direction for the greenback, gold and global financial markets in general.
A potentially ‘dovish’ hike will depress the dollar even further. In this scenario, the precious metal could attract a more robust demand. However, the possible upside impetus will likely be limited against the backdrop of a positive reaction in stock markets. As such, the bullion may not make a clear break above the mentioned $1,250 barrier but in the longer term, it could further regain its attractiveness amid the increasing signs of slowing global growth.