​Dovish FOMC Could Underpin Gold Prices

WikiFX News (30 Nov.) - Last week's gold plunged $84.71, down 4.5%. The dovish Federal Open Market Committee's (FOMC) could underpin gold prices in the coming weeks, despite gold's recent setbacks.

Since the global economy is expected to recover on Covid-19 vaccines, investors are betting that global trade will stabilize after Biden comes to power, which will boost the US stock markets but put pressure on gold.

However, gold's downside correction could prove short-lived given the Fed suggesting the provision of additional monetary stimulus is on the table.

The minutes from the FOMC's November meeting showed that “many participants judged that the Committee might want to enhance its guidance for asset purchases fairly soon.”

Considering Treasury Secretary Steven Mnuchin has refused to extend the Fed's lending facilities, in tandem with initial jobless claims spiking to five-week highs, the Fed may face pressure to take further action. Strong support for gold will be on the cards if the Fed signals more bond purchases at its upcoming meeting in December.

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Chart: Gold Trend