XAU/USD drops to $2,011 as Fed rate cut expectations ease

XAU/USD has declined 0.8% to $2,011 in today's session, marking a potential fourth consecutive day of losses amid broad market deleveraging and shifting Federal Reserve expectations. The precious metal has retreated from recent highs as traders reassess the probability of a December rate cut, with Fed funds futures now pricing in only 42% odds compared to more aggressive expectations earlier. This adjustment in monetary policy outlook has strengthened the dollar index, creating additional headwinds for gold prices. Technical indicators suggest growing bearish momentum, with the metal breaking below the psychologically important $2,020 support level. The next key support zone lies at $2,000, where buyers may attempt to defend the round number. Market participants are monitoring upcoming US economic data releases that could further influence Fed policy decisions. The current pullback represents a notable correction in gold's strong 2024 performance, potentially offering entry opportunities for longer-term bulls.