Gold (XAU/USD) is holding steady just below the $3,400 mark as markets remain in wait-and-see mode ahead of the conclusion of the Federal Reserve’s two-day FOMC meeting on Wednesday. The yellow metal has traded sideways through the first half of the European session, with investors showing hesitation to take new positions in the absence of fresh cues on the Fed’s policy trajectory.
Investor Reluctance Grows Before Fed’s Key Policy Statement
Traders are growing increasingly cautious, unwilling to make aggressive moves until there is clarity on the Federal Reserve’s stance on interest rates. Despite broader expectations that the Fed will keep rates unchanged at this meeting, attention is sharply focused on Chair Jerome Powell’s comments and the updated Summary of Economic Projections, which may shed light on the timing and extent of any rate cuts expected later in 2025.
The US Dollar (USD) has rebounded modestly ahead of the announcement, slightly pressuring gold. However, the greenback’s strength appears fragile due to heightened market expectations for Fed rate cuts in September, a factor that continues to support the gold market longer term.
Fed Expectations vs. Geopolitical Support
Although gold has paused its upward momentum from last week’s rally, the metal continues to find underlying support from a complex mix of macro and geopolitical dynamics:
Middle East tensions remain elevated, with new escalations unfolding between Israel and Iran. Israel’s reported airstrike on Iran’s state-run TV station, coupled with Iran’s threat to launch the “largest and most intense” missile attack in history, has pushed safe-haven demand higher.
In a show of urgency, former U.S. President Donald Trump departed the G7 summit early and directed the U.S. National Security Council to convene for emergency discussions.
Meanwhile, three oil tankers reportedly ablaze in the Gulf of Oman near the Strait of Hormuz—a vital energy chokepoint—have stoked fears of a potential repeat of the 2019 tanker attacks, adding fuel to global risk aversion.
Amid these developments, gold is still viewed as a hedge against geopolitical shocks, and its current stability may represent consolidation rather than weakness.
Market Movers: What’s Driving Gold?
Geopolitical Tensions
Escalation in Middle East hostilities (Israel-Iran)
Risk to global energy routes (Strait of Hormuz)
Trump’s national security urgency adds gravity to investor fears
Monetary Policy Uncertainty
Fed expected to hold rates steady, but markets are looking for dovish hints for September
US dollar strength may be temporary, lacking conviction amid inflation and tariff concerns
Fed Chair Powell’s forward guidance will be critical in shaping short-term direction
Safe-Haven Dynamics
Persistent trade-related uncertainties
Growing concerns over inflation risks tied to possible Trump-era tariffs
Fading equity market momentum supports allocation to gold
Technical Snapshot: Gold at a Crossroads
Current price: ~$3,392
Resistance: $3,400 (psychological), followed by $3,420 and $3,451 (recent high)
Support: $3,373 (key pivot), $3,348 (technical floor), $3,318 (trendline + horizontal support)
Momentum: Neutral to slightly bearish
RSI is hovering in mid-range levels
MACD has turned negative with a minor bearish crossover
Outlook: A break above $3,405 would revive bullish momentum; a move below $3,373 could accelerate downside toward $3,318
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