Gold (XAU/USD) is extending its sideways consolidation early in the European session, hovering just below the weekly high reached earlier on Wednesday.
Market participants are holding back from placing aggressive bets ahead of the Federal Reserve’s (Fed) two-day FOMC meeting, which concludes later today. Updated economic projections and comments from Fed Chair Jerome Powell will be critical in shaping expectations for the upcoming rate-cut cycle, influencing the US Dollar (USD) and the near-term direction of the non-yielding metal.
Daily digest market movers
Firming expectations for additional Fed rate cuts are weighing on the USD, pulling the greenback closer to last week’s lows — its weakest level since late October. This USD softness, combined with a cautious risk tone and ongoing geopolitical concerns tied to the Russia-Ukraine conflict, is helping underpin safe-haven demand for Gold.
Despite these supportive factors, XAU/USD has been trapped in a tight range since early December, reflecting investor hesitation ahead of the key central bank catalyst.
The Fed is widely expected to deliver a 25 basis-point rate cut on Wednesday, even as inflation remains stubbornly above target. Last week’s US PCE data confirmed that price pressures stayed above the Fed’s 2% goal in September.
Fed officials, however, maintain that softer hiring, slower growth, and restrained wage gains should cool inflation over the coming months – a narrative that supports further policy easing.
Tuesday’s stronger-than-expected JOLTS report, showing job openings rising to 7.658 million in September and 7.67 million in October, did little to change market expectations of dovish Fed action.
The USD’s struggle to build on last week’s recovery is offering modest support to Gold, which continues to benefit from safe-haven flows after Ukrainian President Volodymyr Zelenskyy reaffirmed that Kyiv will not concede territory to Russia.
Traders remain cautious and prefer additional clarity on the Fed’s rate-cut trajectory, making Powell’s press conference and the updated dot plot the main event for Gold markets today.
Gold needs to surpass $4,245–4,250 supply zone for further gains
XAU/USD has remained confined within a familiar range for more than two weeks. Although Tuesday’s rebound from range support favors bullish momentum, neutral daily oscillators suggest waiting for a confirmed breakout above the $4,245–4,250 resistance zone before anticipating additional upside. A sustained move above this area could open the door toward $4,277–4,278, with the $4,300 psychological level coming into focus thereafter.
On the downside, initial support is seen at the $4,200 handle. A dip below this level may attract renewed buying near the $4,170–4,165 region – the lower boundary of the trading range. A decisive break beneath this zone would expose the $4,115 confluence support, marked by an ascending trendline from late October and the 200-period EMA on the 4-hour chart. Further weakness below this area could act as a trigger for bearish traders, paving the way for a deeper corrective decline.
Ready to start trading Forex? Join iXBroker today and kick-start your trading journey now!
