Gold (XAU/USD) held steady on Wednesday after retreating from record highs, as traders turned their attention to the Federal Reserve’s (Fed) policy announcement at 18:00 GMT. The precious metal touched a new all-time high near $3,703 on Tuesday before easing as investors booked profits and repositioned ahead of the Fed’s decision.
At the time of writing, XAU/USD trades around $3,682, down 0.20% on the day after bouncing from an intraday low near $3,660. A firm US Dollar (USD) has limited Gold’s upside, though subdued US Treasury yields continue to underpin the metal’s safe-haven appeal.
Fed expected to deliver first rate cut of 2025
The Fed is widely expected to cut rates by 25 basis points (bps) to the 4.00%-4.25% range, its first reduction of 2025. While this move is fully priced in, the updated Summary of Economic Projections (SEP) and dot plot will be critical for gauging the pace of further easing.
Fed Chair Jerome Powell’s press conference at 18:30 GMT will be closely monitored for guidance on how aggressively policymakers plan to respond to cooling labor conditions and lingering inflation risks.
Despite the latest pullback, Gold’s broader uptrend remains intact. Expectations of easier Fed policy, ongoing geopolitical risks, and resilient safe-haven demand continue to support the bullish case for XAU/USD. A dovish Fed could reignite momentum toward fresh record highs, while a cautious signal could trigger deeper consolidation below the $3,700 level.
Political pressure and economic data shape Fed outlook
The Fed enters this meeting under unusual political strain. US President Donald Trump has publicly urged policymakers to deliver a 50 bps cut, while his newly confirmed appointee Stephen Miran—viewed as dovish—will cast his first vote as a Fed Governor. Miran’s arrival, coupled with recent dissent among Fed officials, has raised questions about the central bank’s independence and decision-making balance.
Recent US data has reinforced the case for easing. August Housing Starts plunged 8.5% to their lowest since May, job growth nearly stalled, jobless claims climbed, and producer prices softened. Although CPI came in slightly above expectations, the broader trend points to weakening economic momentum.
According to the CME FedWatch Tool, markets assign a 94% probability to a 25 bps cut and a 6% chance of a larger 50 bps move, underscoring the belief that the Fed will prioritize employment stability over its inflation mandate in the near term.
Technical outlook: XAU/USD consolidates below record highs
On the 4-hour chart, XAU/USD consolidates near $3,680, hovering around the 21-period Simple Moving Average (SMA). Immediate support lies at $3,650-$3,645, aligned with the 50-period SMA. A break below this zone could expose $3,620 and the psychological $3,600 level.
On the upside, holding above current levels keeps the bias constructive. A bounce from $3,650-3,660 could trigger another retest of $3,675-3,700, with resistance at the all-time high of $3,703. A decisive breakout would open the door toward $3,750.
Momentum indicators suggest consolidation. The Relative Strength Index (RSI) sits around 51, reflecting neutral momentum, while the MACD signals fading bullish strength after the recent surge.
The Fed’s policy announcement and Powell’s remarks are likely to provide the catalyst for Gold’s next breakout or correction.
