Quick overview

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The bullion asset drifts lower on Wednesday after failing to find acceptance above the $3,700 mark the day before. Price action showed the yellow metal appears to have ended a three-day winning streak at the all-time high.

The greenback made a slight recovery from its lowest level since early July, putting pressure on precious metals amid repositioning trades ahead of the important FOMC rate decision.

Despite a positive fundamental backdrop, the downside for XAU/USD remains limited.

Gold traders have been factoring in the potential for a more aggressive policy easing by the US Federal Reserve (Fed) amid indications of a softening labor market. The dollar’s recovery attempt may be restrained, and the non-yielding gold may continue to receive some support. Additionally, the cautious market sentiment and growing geopolitical tensions may help limit losses for the safe-haven XAU/USD pair. Traders may also choose to hold off until they receive additional warnings.

The US dollar marginally recovers from a one-and-a-half-month low as bears choose to reduce their wagers in anticipation of the pivotal FOMC policy decision. Consequently, following the recent blowout rally to a record high, there is some profit-taking around the gold price on Wednesday during the Asian session.

Retail sales increased by 0.6 percent in August, for the third consecutive month, and at a faster rate than expected, according to a report released by the US Census Bureau on Tuesday.

Investors are sure that the US Federal Reserve will cut borrowing costs by at least 25 basis points to help the softening labor market. Additionally, by the end of this year, traders will have been factoring in the potential for two more rate cuts