Gold Forecast: XAU/USD buyers lack conviction as Fed policy decision looms

Gold is holding its five-day winning streak near $4,350 in Asian trading on Wednesday, but remains within this week’s familiar range. Traders look forward to the all-important US Federal Reserve (Fed) monetary policy decision for a clear directional impetus.

Gold: All eyes on Warsh-led Fed verdict

This is the critical event risk this Wednesday, as it’s the first FOMC meeting under new Fed Chairman Kevin Warsh; hence, his words will carry more weight than the interest rate decision itself.

Markets will closely scrutinize Warsh’s view on inflation and growth alongside liquidity conditions and the balance sheet.

Additionally, the Fed rate announcement will be accompanied by the updated Summary of the Economic Projections (SEP), the so-called dot plot chart. Median forecasts now project a shift away from a 25-basis-point (bps) rate cut this year to a 25-bps rate hike.

Meanwhile, the US central bank is widely expected to hold the key interest rate in the range of 3.5% to 3.75% on Wednesday.

Gold could come under renewed pressure if the Fed delivers a hawkish message. A stronger focus on inflation, expectations for a rate hike later this year, or signals of balance sheet tightening could reinforce a higher-for-longer policy outlook and drag Gold back toward the key $4,000 level.

Conversely, if Kevin Warsh supports holding rates steady, dissents in favor of a cut, or emphasizes growth risks over inflation concerns, the US Dollar could weaken significantly. Such an outcome may fuel a further Gold recovery toward the 200-day Simple Moving Average (SMA) just above the $4,450 level.

In the lead-up to the Fed event risk, however, Gold could see a brief profit-taking pullback, particularly after the recent recovery from year-to-date (YTD) lows near $4,020. Traders may refrain from placing fresh bets on the bullion before Warsh takes the rostrum at his debut post-policy meeting press conference later on Wednesday.

Additionally, markets also eagerly await details of the interim peace agreement between the United States (US) and Iran, with the deal likely to be signed on Friday at the G7 Summit in Geneva.

US President Donald Trump said that it will rule out a nuclear weapon for Tehran, and a US official noted that it will allow Iran to sell oil upon signing.

Markets will also assess a fresh report published by the World Gold Council (WGC) on Tuesday, which showed that a record 45% of the reserve managers surveyed expect to increase their own institutions’ gold holdings over the next 12 months.

Gold price technical analysis: Daily chart

In the daily chart, XAU/USD trades at $4,333.21. The metal remains under clear downside pressure as it holds below the 21-day simple moving average (SMA) at roughly $4,402, with the longer-term 200-day, 50-day and 100-day SMAs stacked well above price near $4,461, $4,565 and $4,746 respectively, reinforcing a bearish near-term bias. The Relative Strength Index (RSI) around 44 stays below the midline, hinting that sellers retain the upper hand even as the recent slide shows some signs of stabilizing.

On the topside, initial resistance emerges at the 21-day SMA around $4,402, where a daily close back above would be needed to ease immediate bearish pressure. Further up, the 200-day SMA near $4,461 is the next relevant cap, followed by the 50-day SMA around $4,565, while the 100-day SMA at about $4,746 defines a broader resistance zone that would likely limit recoveries unless a more sustained bullish reversal develops.

(The technical analysis of this story was written with the help of an AI tool.)