FX.co ★ Crude | XAU/USD, GOLD

Gold (XAU/USD) held onto modest gains during Wednesday's European trading session, hovering around the $4,350 level, supported by a retreat from a two-week high, which provided temporary relief. However, market participants remained hesitant to make bold one-sided bets, preferring to wait ahead of key monetary policy announcements from central banks. The Federal Reserve will announce its monetary policy decision later today, with the market widely expecting a 25-basis-point rate hike at its September 15-16 meeting. In addition to the rate decision, the market will be closely watching the Fed's updated economic projections and dot chart. Furthermore, Fed Chair Kevin Warsh's remarks at the post-meeting press conference will be scrutinized for clues about the future direction of monetary policy, which will ultimately determine the short-term direction of the dollar and provide directional impetus for non-interest-bearing gold. The macroeconomic situation is further complicated by inflation risks stemming from persistently high energy prices, reinforcing market expectations of continued policy tightening. On Tuesday, crude oil prices surged to multi-month highs amid growing concerns about potential supply disruptions in the Middle East. Simultaneously, a rapid expansion of public and private borrowing triggered a sell-off in global bond markets, pushing the yield on the benchmark 10-year US Treasury note above the key 5% threshold for the first time since 2023, reaching its highest level since 2007. Adding to the turmoil, escalating geopolitical tensions in the Middle East continue to fuel demand for the US dollar as a safe haven, potentially limiting the upward momentum of gold prices. Recent developments indicate that Saudi Arabia has issued security alerts across large swaths of its territory, including major urban centers such as Mecca and Jeddah, following a series of drone and missile attacks launched by Houthi rebels (an Iranian-backed armed group) in Yemen. The Saudi-led coalition's pledge of a decisive response has significantly increased the risk of further escalation in the region. Meanwhile, the US Central Command has rerouted numerous commercial vessels to forcibly close off Iranian maritime trade through the Strait of Hormuz. These developments continue to push up oil prices and bolster currency momentum. Technically, precious metals prices have shown resilience below the 50-day simple moving average while holding above the 50% Fibonacci retracement level of the July-August rally. However, momentum indicators are showing signs of weakening, with the Moving Average Convergence Divergence (MACD) in negative territory and the Relative Strength Index (RSI) hovering below the neutral 50-period midline. This pattern suggests that even if prices manage to stay above key moving average support levels, the upward momentum will likely fade. Any attempt to rebound will therefore face immediate resistance at the 38.2% Fibonacci retracement level near $4,413, while the 23.6% Fibonacci retracement level near $4,520 presents even stronger resistance, potentially triggering a resurgence of historical selling pressure. Conversely, downside protection begins at the 50.0% Fibonacci retracement level near $4326 and is strongly supported by the 50-day moving average near $4280. A break below these support levels could lead to a test of the 61.8% Fibonacci retracement level near $4240, and potentially further declines towards the $4116 and $3959 areas.