Gold Price Forecast: XAU/USD buyers re-emerge ahead of the key Fed event risk

Gold price bounces after the previous retreat from record highs, as Fed verdict looms.
The US Dollar returns to the red amid pre-Fed caution and sluggish Treasury bond yields.
Gold price could retest lifetime highs at $2,590 amid the bullish daily RSI and while above $2,560.

Dhwani Mehta FXStreet

Gold price is finding some fresh demand near $2,570 early Wednesday, as buyers look to fight back control following the previous day’s correction from record highs of $2,590. Traders, however, could refrain from placing fresh directional bets on Gold price in the lead-up to all-important US Federal Reserve (Fed) monetary policy announcements.

Gold price eyes Fed interest rate decision and Powell speech

On the Fed day, markets continue to price in a 65% probability of 50 basis points (bps) interest rate cut, the CME Group’s FedWatch Tool showed, reviving the selling interest around the US Dollar (USD), as the US Treasury bond yields also turn defensive amidst the market caution.

Thus. Gold price attempts to retake the all-time-high just shy of the $2,600 mark, with eyes on the Fed verdict, Chairman Jerome Powell’s press conference and the Dot Plot chart, all of which will help gauge the US central bank’s future policy action.

If the Fed delivers a 25 bps rate cut later this Wednesday, it could fuel a knee-jerk US Dollar upswing. However, the immediate reaction to the Fed announcements could be overshadowed by the implications of the Fed’s projections and Powell’s words. Gold price, therefore, remains subject to intense volatility during the Fed event.

An outrightly dovish outcome and rate projections by the world’s most powerful central bank could prompt Gold price to refresh record highs at the expense of the US Dollar. "A dovish Fed on a substantial easing path should generally lead to a weaker dollar," said Nathan Swami, head of currency trading at Citi in Singapore.

In contrast, should the Fed acknowledge potential upside risks to inflation and maintain a cautious tone, it could bring the hawks back in the game, weighing negatively on the non-interest-bearing Gold price.

Gold price corrected briefly from record highs on Tuesday, courtesy of a profit-taking spree in the US Dollar ahead of the Fed event while strong US Retail Sales data also contributed to the resurgent USD demand. US Retail Sales rebounded by 0.1% MoM in August, data showed on Tuesday, against expectations for a 0.2% contraction. Data somewhat eased fears over a potential US ‘hard-landing’.

Gold price technical analysis: Daily chart

Gold buyers regain control, as the 14-day Relative Strength Index (RSI) remains comfortably above the 50 level, having eased off from near the overbought territory.

The optimism prevails so long as they defend the one-and-a-half-month-old symmetrical triangle target now support at $2,560.

That said, the immediate resistance is seen at the record high of $2,590, above which the $2,600 level will be tested.

Acceptance above that level will call for a test of the $2,650 psychological barrier.

If the Fed disappoints the doves, Gold price could witness a fresh sell-off, which could challenge the August 20 high of $2,532.

Additional declines will threaten the 21-day Simple Moving Average (SMA) at $2,522, below which the $2,500 mark will be on sellers’ radars.

Economic Indicator

Fed Interest Rate Decision

The Federal Reserve (Fed) deliberates on monetary policy and makes a decision on interest rates at eight pre-scheduled meetings per year. It has two mandates: to keep inflation at 2%, and to maintain full employment. Its main tool for achieving this is by setting interest rates – both at which it lends to banks and banks lend to each other. If it decides to hike rates, the US Dollar (USD) tends to strengthen as it attracts more foreign capital inflows. If it cuts rates, it tends to weaken the USD as capital drains out to countries offering higher returns. If rates are left unchanged, attention turns to the tone of the Federal Open Market Committee (FOMC) statement, and whether it is hawkish (expectant of higher future interest rates), or dovish (expectant of lower future rates).

AUD/USD remains depressed 0.7000, awaits FOMC Minutes

AUD/USD struggles to capitalize on its recent recovery move and trades with a negative bias below 0.7000 in Wednesday's Asian session. Amid geopolitical uncertainty, the US Dollar attracts some dip-buyers after a fresh leg up in US bond yields, keeping the pair under pressure despite hawkish RBA expectations. All eyes now remain on the FOMC Minutes.

USD/JPY holds firm near 158.50 ahead of Fed Minutes

USD/JPY hangs close to a one-and-a-half-week high near 158.50 in the Asian session on Wednesday, with bulls now awaiting a move beyond the 200-day SMA hurdle before positioning for further gains ahead of the FOMC Minutes. Meanwhile, a fresh leg up in US bond yields revives US Dollar demand amid geopolitical uncertainties, boosting the pair amid dovish BoJ commentary.

Gold eyes Fed Minutes for fresh impetus after holding $4,100

Gold is fading the previous rebound in Asia on Wednesday, struggling near $4,150. US Dollar bounces in sync with Oil prices and US Treasury yields ahead of FOMC Minutes. From a short-term technical view, Gold remains a ‘sell-on-bounce’ trade.

USD/INR remains broadly muted after RBI’s 25 bps hike in Repo Rates to 5.5%

The Indian Rupee has not shown a significant reaction against the US Dollar, following the RBI’s monetary policy decision. The RBI has raised its key Repo Rate by 25 bps to 5.5%. India’s central bank shifts policy stance to 'calibrated tightening' from 'neutral'.

France's government could fall over the budget. Here's what that would actually mean for the Euro

The Euro (EUR) is trading at its lowest level since May 2025, nearly 7% below its January peak, and France's government could fall over its 2027 budget before the end of November. A French government falling hasn't moved the Euro much by itself, so the risk to price is narrower: France losing its place under the emergency safety net the European Central Bank (ECB) keeps for government bonds.

Eurozone inflation just hit 3.8%, its highest in three years. This chart shows why the ECB can’t simply hike its way out

The ECB would normally have a relatively straightforward answer to inflation running almost twice its target: raise interest rates. But these are not normal circumstances. This time, the bond market is already doing part of the tightening for it, leaving the ECB facing an increasingly difficult dilemma.