Gold (XAU/USD) slipped slightly during the Asian session on Wednesday, extending Tuesday’s rejection from the $3,700 level and pausing a three-day rally that had lifted the precious metal to record highs. A rebound in the US Dollar (USD) from its lowest point since early July, driven by position adjustments ahead of the Federal Reserve’s highly anticipated policy decision, weighed on bullion. Still, the downside remains limited as supportive fundamentals keep bearish momentum in check.
Market participants are increasingly pricing in the likelihood of more aggressive monetary easing by the Federal Reserve (Fed), as signs of a cooling labor market emerge. Such expectations may prevent a sustained USD rebound and continue to underpin gold’s appeal as a non-yielding asset. Heightened geopolitical risks and broader market caution are also providing a floor for XAU/USD, as traders await fresh direction from the Fed’s updated rate outlook.
Daily market movers: gold stalls as USD rebounds ahead of Fed
The US Dollar has recovered modestly from a six-week low, with investors paring back bearish bets ahead of the Federal Open Market Committee’s (FOMC) policy announcement later today. This has prompted profit-taking in gold after its sharp rally to record territory.
Adding to USD support, Tuesday’s data from the US Census Bureau showed retail sales rising for the third consecutive month in August, up 0.6% and outpacing expectations. The figures highlighted consumer resilience despite a slowing economy, elevated inflation, and labor market softness.
Even so, markets remain confident that the Fed will cut rates by at least 25 basis points at the conclusion of its two-day meeting. Investors are also factoring in the possibility of two further reductions by year-end. Beyond the headline decision, updated economic projections and Fed Chair Jerome Powell’s press conference will be closely watched for signals on the pace and scale of future easing.
Geopolitical developments are further reinforcing safe-haven demand. Reports indicate that Ukraine struck one of Russia’s largest oil refining facilities overnight, while Moscow claimed control of a village near the Donetsk border. In the Middle East, Israel intensified its long-planned ground assault on Gaza City, escalating a conflict that has already drawn global attention. These risks are helping limit deeper losses for gold.
Technical outlook: bulls cautious below $3,700
On the technical side, the overbought daily Relative Strength Index (RSI) has triggered profit-taking, though gold’s breakout above a bullish flag pattern earlier this week signals that dips may attract fresh buying interest. Immediate support is seen at $3,645, followed by the $3,633 zone. A sustained move below these levels could open the door to $3,610–3,600.
That area is expected to act as a strong base for XAU/USD. A decisive break lower could extend the pullback toward $3,562–3,560 and potentially the psychological $3,500 mark. On the upside, bulls will be looking for a firm break above $3,700 to confirm fresh momentum and extend the broader uptrend established over the past month.
