Gold Price Forecast: XAU/USD could crack 50-day SMA support if Fed turns hawkish
- Gold extends downside consolidation around $5,000 early Wednesday, awaiting the Fed for a clear direction.
- The US Dollar holds the profit-taking-led corrective decline as the Middle War rages on.
- Technically, Gold eyes a decisive break below the 50-day SMA at $4,976 as RSI remains below 50.
Gold is hanging around the $5,000 psychological level early Wednesday, at its weakest level in a month, as traders keenly await the US Federal Reserve (Fed) monetary policy announcements for a fresh directional impetus.
Gold: All eyes on Fed verdict
Fundamentally, nothing seems to have changed for Gold traders as a protracted war in the Middle East continues to lend support to Oil prices, keeping inflationary concerns and hawkish Fed expectations alive, in turn, weighing negatively on the non-yielding bullion.
However, the downside remains capped so far this week, as the US Dollar (USD) has pulled back from ten-month highs reached against its six major currency rivals. Traders resorted to profit-taking on their USD longs ahead of the critical Fed monetary policy meeting on Wednesday.
The Fed is widely expected to keep the benchmark interest rate unchanged at 3.50%-3.75%, but all eyes will remain on the 2026 interest rate path, as signalled by the Dot Plot chart and Chairman Jerome Powell’s tone during the post-policy meeting press conference.
Any revisions to the inflation and growth forecasts will also be closely scrutinized amid the energy shock, fuelled by the Middle East war.
In the lead-up to the Fed event risk, Gold could take temporary cues from the US Producer Price Index (PPI) data and the war headlines.
Gold price technical analysis: Daily chart
Watch the $4,976 level closely — a break below the 50-day SMA could open the door for further downside if the Fed reinforces a higher-for-longer stance and pushes rate cut expectations beyond September.
Any upward revision to inflation forecasts would add to the pressure on Gold, while even a subtle hint of a rate hike could accelerate the sell-off. The next critical supports are seen at the $4,900 round level and the 38.2% Fibonacci Retracement at $4.858.
On the upside, if Jerome Powell strikes a dovish tone and downplays inflation risks despite rising oil prices, it could shift expectations toward an earlier rate cut.
In that case, look for Gold to reclaim $5,141 — a move above this 61.8% Fibonacci Resistance level could signal renewed bullish momentum. Ahead of that level, the $5,100 level could test the bearish commitments.
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).
Read more.Next release: Wed Mar 18, 2026 18:00
Frequency: Irregular
Consensus: 3.75%
Previous: 3.75%
Source: Federal Reserve
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
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.
