Gold stuck in a range around $5,000; looks to Fed decision for fresh impetus
- Gold remains confined in a multi-day range as traders keenly await the crucial FOMC decision.
- Inflation concerns temper Fed rate cut bets, underpinning the USD and capping the commodity.
- Heightened geopolitical uncertainty continues to act as a tailwind for the safe-haven precious metal.
Gold (XAU/USD) is seen extending its sideways consolidative price move around the $5,000 psychological mark for the third straight day on Wednesday as traders opt to wait for the crucial FOMC decision. The US Federal Reserve (Fed) is expected to maintain the status quo and keep interest rates steady at the end of a two-day meeting. The market focus, however, will be on the accompanying policy statement and updated economic projections, including the so-called dot plot. Moreover, Fed Chair Jerome Powell's comments during the post-meeting press conference will be scrutinized closely for more cues about the path of future interest rates amid fears of a war-driven spike in inflation. This, in turn, will influence the US Dollar (USD) price dynamics and provide a fresh directional impetus to the non-yielding yellow metal.
Meanwhile, the US-Israel attacks on Iran and the effective closure of the Strait of Hormuz – a critical chokepoint handling around 20% of global oil supply – led to severe disruption of energy trade. This has been fueling inflationary concerns and forcing traders to trim their bets for more interest rate cuts by the Fed in 2026. In fact, the current market pricing indicates a significant shift in market expectations from multiple rate reductions to potentially just one in December. This, in turn, assists the USD to stall a two-day-old retracement slide from its highest level since May 2025 and turns out to be a key factor acting as a headwind for the Gold price. However, heightened geopolitical uncertainties continue to benefit traditional safe-haven assets and limit the downside for the precious metal, warranting caution for bears.
Iranian authorities confirmed that top security official, Ali Larijani, and the head of the paramilitary Basij force, Gholamreza Soleimani, were killed in Israeli air strikes on Tuesday. Iran's army chief Amir Hatami said in a statement that Iran’s response to the assassination of the secretary of the Supreme National Security Council will be decisive and regrettable. Meanwhile, the US military targeted sites along Iran’s coastline near the Strait of Hormuz. This, along with the risk of a further escalation of conflicts in the Middle East, could offer some support to the Gold. Meanwhile, policy updates by other major central banks – the European Central Bank (ECB), the Bank of Japan (BoJ), and the Bank of England (BoE) – should produce some trading opportunities around the XAU/USD pair during the latter part of the week.
XAU/USD 4-hour chart
Gold seems vulnerable as break below ascending trend line and 200-SMA on H4 remains in play
The near-term bias is mildly bearish as the precious metal has slipped beneath the 200-period Simple Moving Average (SMA) on the 4-hour chart and the upward-sloping trend line support. The Moving Average Convergence Divergence (MACD) line has turned higher above its Signal line but remains close to the zero mark, suggesting only tentative recovery attempts within a broader softening backdrop. The Relative Strength Index (RSI) near 39 stays below the 50 midline, indicating prevailing bearish pressure despite the recent stabilization.
Immediate resistance emerges at the 200-period SMA around $5,061, and a recovery above this area would be needed to ease downside pressure and expose the recent swing region around $5,100 as the next barrier. On the downside, initial support is located at the recent low near $4,985, with a sustained break opening the way toward the previous reaction area around $4,950. A decisive move below $4,950 would strengthen the bearish extension toward the rising trend line’s prior consolidation band closer to $4,900, while only a firm reclaim of $5,061 and $5,100 would begin to neutralize the current negative tone.
(The technical analysis of this story was written with the help of an AI tool.)
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Technical Analysis:
In the 4-hour chart, XAU/USD trades at $5,002.73.
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