Gold Price Forecast: XAU/USD continues its struggles with $4,200 as the Fed week kicks in
- Gold treads water around $4,200 early Monday, while within the previous week’s trading range.
- US Dollar holds lower ground amid looming Fed rate cut call and a cautious mood.
- Gold’s daily technical setup suggests that buyers are not ready to give up yet.
Gold is trading around a flat line near the $4,200 mark, starting a crucial US Federal Reserve (Fed) week on a cautious footing.
Gold extends its range play, with eyes on the Fed verdict
Amid sustained US Dollar (USD) weakness and simmering geopolitical tensions between Japan and China, Gold buyers continue to provide a floor while sellers keep lurking at higher levels.
The upside remains guarded, anticipating a probable hawkish guidance from the Fed this week. The Fed is widely expected to lower the interest rates by 25 basis points (bps) to 3.5%-3.75%, with the odds currently sitting close to 90%, the CME Group’s FedWatch Tool shows.
The Fed’s outlook on the 2026 rate path will also hold the key, leaving Gold wavering in a tight range at the start of the week on Monday.
The recent series of unimpressive US economic data continues to favor the dovish Fed expectations.
Meanwhile, markets remain cautious after Japanese Defence Minister Shinjiro Koizumi reported on Sunday, Chinese fighter jets twice directed fire-control radar at its F-15 aircraft over international waters near Okinawa.
On the other hand, Beijing accused Japanese jets of interrupting their air training.
Gold finds additional support from a solid growth in China’s Exports for November, with both the Yuan and USD-denominated jump reported at 5.7% and 5.9%, respectively. China is the world’s top yellow metal consumer.
In the day ahead, Gold will continue to take cues from broad market sentiment in the absence of top-tier US economic data. Geopolitical developments in Asia will also be closely monitored.
Gold price technical analysis: Daily chart
In the daily chart, the 21-day Simple Moving Average (SMA) climbs above the 50-, 100-, and 200-day SMAs, with all slopes rising and price holding above them, reinforcing a bullish bias. The 21-day SMA at $4,147.93 offers nearby dynamic support, while the 50-day SMA at $4,084.46 underpins the advance. The Relative Strength Index (RSI) sits at 61.33, edging higher from 60.31 and signaling firm, but not overbought, momentum. Measured from the $4,381.17 high to the $3,885.84 low, the 61.8% retracement at $4,191.95 has been surpassed, hinting the prior bearish phase is losing strength.
Upside extension faces resistance at the 78.6% retracement at $4,275.16; a decisive close above this barrier would open the path toward the prior top. If buyers fail to sustain above the 61.8% marker, a pullback could revisit the 50% retracement at $4,133.50. Beneath that, trend support remains defined by rising moving averages, with the 50-day SMA cushioning the downside. Overall, momentum and trend alignment favor dips being bought while Fibonacci thresholds frame the next directional cues.
(The technical analysis of this story was written with the help of an AI tool)
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
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Author
Dhwani Mehta
FXStreet
Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.
