Gold Holds Near $5,000 Ahead of Fed Decision
Gold prices continue to trade in a tight range around the key psychological level of $5,000 during Wednesday’s European session, as traders remain cautious ahead of the highly anticipated FOMC decision. The US Federal Reserve is widely expected to keep interest rates unchanged at the end of its two-day meeting. However, market attention will focus on the accompanying policy statement and updated economic projections, including the closely watched dot plot.
In the short term, the outlook remains slightly bearish. The precious metal has slipped below the 200-period Simple Moving Average (SMA) on the 4-hour chart, as well as an ascending trendline support. The Moving Average Convergence Divergence (MACD) has turned higher above its signal line but remains near the zero level, suggesting only a tentative recovery within a broader weakening trend. Meanwhile, the Relative Strength Index (RSI), hovering near 39, stays below the neutral 50 mark, indicating persistent bearish pressure despite recent stabilization.
Immediate resistance is seen at the 200-period SMA around $5,061. A sustained move above this level is needed to ease downside pressure and open the door toward the recent swing high near $5,100. On the downside, initial support lies near the recent low at $4,985. A decisive break below this level could expose the next support zone around $4,950. Further weakness beneath $4,950 may accelerate losses toward the previous consolidation band near $4,900. Only a strong breakout above $5,061 and $5,100 would begin to neutralize the current bearish bias.
Investors are also closely watching Federal Reserve Chair Jerome Powell’s remarks during the post-meeting press conference for clues on the future interest rate path, especially amid rising inflation concerns driven by geopolitical tensions. These developments are expected to influence US Dollar dynamics and provide fresh directional momentum for non-yielding assets like gold.
Meanwhile, escalating geopolitical risks continue to shape market sentiment. The ongoing US-Israel conflict with Iran, along with the effective closure of the Strait of Hormuz—a critical chokepoint handling around 20% of global oil supply—has severely disrupted energy trade. This has fueled inflation fears and prompted traders to scale back expectations for aggressive rate cuts by the Fed in 2026. Current market pricing now suggests a shift from multiple rate cuts to possibly just one in December.
This shift has helped the US Dollar recover from its recent two-day pullback from highs last seen in May 2025, acting as a key headwind for gold prices. However, heightened geopolitical uncertainty continues to support safe-haven demand, limiting downside risks for the precious metal and urging caution among bearish traders.
On the geopolitical front, Iranian authorities confirmed that senior officials, including Ali Larijani and Basij paramilitary chief Gholamreza Soleimani, were killed in an Israeli airstrike on Tuesday. Iran’s armed forces chief, Amir Hatami, stated that the response would be firm. At the same time, US military operations targeting sites along Iran’s coastline near the Strait of Hormuz have raised concerns of further escalation in the Middle East.
Looking ahead, upcoming policy updates from major central banks—including the European Central Bank (ECB), Bank of Japan (BoJ), and Bank of England (BoE)—could generate additional trading opportunities for XAU/USD in the latter part of the week.