The yellow metal is suffering losses for a fifth day in a row after an impressive rally that took place last Thursday. Today, gold prices have eroded the $1,222 handle and now threaten to challenge the $1,220 support level. The dollar regains strength following a bearish knee-jerk reaction to the midterm election outcome, which increases the downside risks for the bullion.
The market focus has shifted to the FOMC meeting that concludes later today. The Federal Reserve is expected to take a positive stance on further monetary tightening, citing healthy economic fundamentals in the US. The central bank will also likely confirm its commitment to another rate hike in December. Such a scenario will be USD-positive and could accelerate its recovery against major rivals.
If so, gold prices could grind even lower amid the combination of a stronger greenback and a relatively robust risk appetite. However, the downside potential looks limited at this stage as the Fed will hardly be able to spark a sustainable rally in the buck.