Gold price (XAU/USD) has sensed some selling pressure after advancing to near $1,952.00 in the European session. The precious metal has faced delicate resistance as the US Dollar Index (DXY) has displayed a short-term pause after a vertical sell-off. The downside bias for the USD index has not faded yet as a temporary pause in the policy-tightening spell by the Federal Reserve (Fed) is likely.

S&P500 futures are holding gains added in early Europe in hopes that a neutral interest rate policy announcement by Fed chair Jerome Powell would infuse optimism among the market participants. Investors should be prepared for any worse situation as an unexpected interest rate hike would dampen the market sentiment.

As per the CME Fedwatch tool, more than 95% chances are in favor of a steady interest rate policy. The risk profile could get dampened if the dot plot by the Fed turns out to be extremely hawkish. No doubt, United States inflation has softened and tight labor market conditions have released some heat. Headline inflation is still double the targeted rate of 2% and the US economy is still operating at full employment levels.

Apart from the Fed policy, investors will also focus on the US Producer Price Index (PPI) data. Monthly headline PPI is expected to show a deflation of 0.1% as gasoline prices have dropped significantly. While monthly core PPI that excludes oil and food prices is expected to maintain a 0.2% pace.