Gold Price Forecast: Spot Gold slides 1.85% to defend $4,600 ahead of the Fed decision
- XAU/USD fell 1.85% on Tuesday, closing near $4,596 after finding limited support at the $4,600 area.
- Gold has closed lower in four of the last six sessions, with the daily decline accelerating into the Fed week.
- Wednesday's Fed decision and Thursday's US Q1 GDP and Core PCE prints are the key US data risks.
XAU/USD declined 1.85% on Tuesday, closing near $4,596 after the spot session pushed down to a low close to $4,555 before recovering modestly into the New York close. The metal has now closed lower in four of the last six sessions, with Tuesday's slide breaking the consolidation that had held above $4,650 earlier in the week. The $4,600 level provided limited support intraday, with a cluster of small-bodied candles forming around it as buyers and sellers held positions ahead of the Fed.
The Federal Reserve's (Fed) policy decision at 18:00 UTC on Wednesday is the dominant catalyst for the next 24 hours, with the federal funds rate expected to be held at 3.50% to 3.75%. Markets are watching for Chair Powell's tone on inflation persistence given renewed energy price pressure from the Iran conflict and Strait of Hormuz disruptions, and for any indication of how the Fed plans to balance its inflation mandate against a Crude Oil-driven cost shock. A hawkish hold would likely lift Treasury yields and the US Dollar, putting further pressure on Gold; conversely, any acknowledgment that the energy shock could prompt a more patient stance would offer Gold relief.
Beyond the Fed, Thursday brings Q1 Gross Domestic Product (GDP), forecast at 2.3% Annualized after the prior 0.5% reading, and the March Personal Consumption Expenditures Price Index (PCE), with Core PCE seen at 3.2% YoY versus 3% prior. Friday's Institute for Supply Management Manufacturing Purchasing Managers Index (PMI) rounds out the week, with the prices paid sub-index expected to land near 80, well above the 50 expansion threshold. Stronger US growth alongside stickier inflation prints would reinforce the case for a firmer US Dollar and weigh further on Gold through the week.
XAU/USD 15-minute chart
Technical Analysis
In the fifteen-minute chart, XAU/USD trades at $4,595.84, extending a corrective pullback below the day’s open at $4,697.98 and keeping a modest bearish intraday tone as price remains capped by that overhead reference. The Stochastic RSI has retreated sharply from overbought territory toward mid-range readings, suggesting waning upside momentum after earlier gains and reinforcing the idea that rallies may struggle while the metal trades under the session open.
On the topside, the day’s open at $4,697.98 acts as the first notable resistance, and a sustained break above this level would be needed to ease the current capped bias and reopen the path toward higher intraday highs. On the downside, immediate levels are less well-defined on this timeframe, so short-term traders may instead focus on intrabar price action and momentum swings, with further Stochastic RSI softening hinting that additional downside probes cannot be ruled out while spot remains below the $4,700 region.
In the daily chart, XAU/USD trades at $4,595.84, consolidating between its major exponential moving averages as near-term direction turns neutral. The price holds well above the 200-day Exponential Moving Average (EMA) at around $4,325.77, which suggests the broader uptrend remains intact, yet it trades below the 50-day EMA at roughly $4,764.90, leaving the metal capped in the short term. The Stochastic RSI has cooled toward the lower mid-range near 32, hinting that recent downside pressure is losing momentum rather than signaling a full-fledged bearish reversal.
On the topside, immediate resistance is defined by the 50-day EMA at $4,764.90, and a daily close above this barrier would reopen the path toward the recent highs. On the downside, the current area near $4,595.84 acts as an initial pivot, with more substantial support at the 200-day EMA around $4,325.77; a break below this longer-term average would significantly weaken the bullish structure and expose deeper corrective losses.
(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.
Recommended Articles
