FX.co ★ Der | XAU/USD, GOLD

Gold attempted to break through the $4,300 level again in early Wednesday trading, continuing the modest recovery that began in Tuesday's Asian session. Market participants are closely watching the Federal Reserve's monetary policy decision and economic projections later today. The market widely expects the Fed to raise interest rates by 25 basis points to a range of 3.75% to 4%, with the Chicago Board of Trade's FedWatch tool indicating a probability of around 92%. In addition to the expected rate adjustment, investors will also be monitoring the Fed's updated summary of economic projections (known as the "point chart") and the precise wording of the policy statement. If Fed Chair Kevin Warsh expresses concern about persistent inflationary pressures in his post-meeting remarks, it could signal further monetary tightening, forcing traders to assess whether this is a "precautionary raise" or the official start of a sharp monetary tightening cycle. These policy statements are being released against a backdrop of a volatile macroeconomic environment, characterized by a sharp rise in US Treasury yields to multi-year highs, largely driven by soaring oil prices fueled by escalating conflicts in the Middle East, which have exacerbated inflation fears. As a result, market expectations of a tighter monetary policy have kept the dollar near its highest level in two weeks against major currencies, while the benchmark 10-year US Treasury yield hovers around the key 5% threshold. This has raised doubts about the sustainability of the recent rally in gold prices, with many believing it is merely a pre-event adjustment. Precious metals continue to face cross-risks from the upcoming Federal Reserve decision. Should policymakers announce a 25-basis-point rate hike in a hawkish scenario, signaling further monetary tightening later this year and underscoring persistent inflation risks, the dollar and US Treasury yields could rise sharply, putting significant downward pressure on gold. Conversely, if the committee's views diverge, the monetary policy path appears weak, or the move is perceived as a one-off safety measure, the dollar could weaken, paving the way for a gold price rally. ING strategists note that while the risks of monetary tightening seem fully priced into the market, gold remains vulnerable if officials signal that interest rates will remain "high for an extended period." Meanwhile, they emphasize that ongoing geopolitical tensions and economic concerns related to rising energy prices could provide potential support for gold prices, placing this safe-haven asset in a precarious position between expectations of monetary tightening and demand for it as a safe haven.

Technically, the XAU/USD pair is trading around $4328.88 on the daily chart, hovering near the 100-day simple moving average ($4330), while being constrained by the 21-day simple moving average ($4449.03). This technical pattern—close to the short- and medium-term moving averages, with the Relative Strength Index (RSI) remaining at a neutral level near 47—suggests a clear tendency toward consolidation, as both buyers and sellers await a clear catalyst. On the upside, initial resistance lies at the 21-day moving average around $4,449, while if buyers manage to gain control, the 200-day moving average around $4,540 will provide strong resistance. On the downside, the nearby 100-day moving average ($4,327) and the subsequent 50-day moving average ($4,281) will offer immediate support. A decisive break below these key support levels would trigger a deeper correction and potentially early declines, as the overall trend needs time to adjust.