Gold prices (XAU/USD) held steady on Wednesday, trading within a narrow range around the $2,570 mark as markets braced for the conclusion of the Federal Reserve’s highly anticipated two-day Federal Open Market Committee (FOMC) meeting. Investors appeared cautious, refraining from significant trades ahead of the central bank’s decision, which is expected to set the tone for future price movements.
Anticipation of a possible shift toward more aggressive monetary easing by the Fed is putting downward pressure on the US Dollar, which struggled to recover from its lowest point since July 2023, touched earlier this week. This development has indirectly supported the gold market, as the weaker dollar makes the precious metal more attractive to investors.
In addition to the Fed’s pending decision, geopolitical tensions in the Middle East and political uncertainty in the United States ahead of the November presidential election are likely to keep gold prices buoyant. Investors are also keeping an eye on central bank meetings in Europe and Asia this week, with the Bank of England set to announce its policy decision on Thursday, followed by the Bank of Japan on Friday. These events are expected to shape investor sentiment in the near term.
Despite these factors, it remains prudent to await stronger selling momentum before confirming a potential top in gold prices. The precious metal recently pulled back from its record high of $2,589-$2,590, achieved earlier this week, though this decline has not yet led to significant bearish sentiment.
Gold prices could see renewed buying interest on Wednesday if the Federal Reserve opts for a more dovish stance. According to the CME Group’s FedWatch Tool, markets currently predict a 65% chance that the Fed will cut interest rates by 50 basis points at the end of its meeting.
Meanwhile, US government bond yields rebounded slightly from a 16-month low, following better-than-expected retail sales data released on Tuesday. The US Census Bureau reported a 0.1% rise in retail sales for August, defying expectations of a 0.2% decline. However, the dollar’s recovery stalled as traders continued to anticipate a dovish outlook from the Fed.
Geopolitical developments have also provided support for the safe-haven asset. In Lebanon, at least nine people were killed in explosions involving Hezbollah members, raising concerns about a broader conflict in the Middle East. Additionally, North Korea escalated tensions by test-firing multiple ballistic missiles toward South Korea and Japan.
From a technical standpoint, gold remains positioned for further gains. Bulls may look for a push beyond the $2,589-$2,590 range, the all-time high set earlier this week. A sustained move above this level could propel prices past $2,600, with a potential test of the upper boundary of a short-term ascending channel around $2,609-$2,610. A breakout above this zone would confirm a continuation of the recent uptrend.
Conversely, a dip below the overnight low of $2,561-$2,560 could trigger further losses, potentially pushing gold toward the key support levels at $2,530-$2,525. Should prices fall further, the psychological $2,500 mark could come into play, with deeper declines toward the $2,475-$2,470 range possible if that support is broken.
As markets await clarity from the Fed, gold prices remain caught between bullish technical setups and broader uncertainties in the economic and geopolitical landscape.
