Gold Price Forecast: XAU/USD defends key 61.8% Fibo level ahead of the Fed showdown

Gold regains ground above $4,200 as all eyes remain on the Fed’s policy outlook and Powell’s words.
US Dollar upswing stalls alongside Treasury yields amid a typical caution pre-Fed.
Gold’s daily setup leans in favor of buyers, as the key 61.8% Fibo support at $4,192 holds.

Dhwani Mehta FXStreet

Gold is defending the $4,200 mark early Wednesday, having staged a decent comeback on Tuesday from near the $4,170 region. Traders gear up for the all-important US Federal Reserve (Fed) policy announcements.

Gold: Will Fed deliver a hawkish surprise?

Gold is tracking the renewed record-setting rally in Silver, in anticipation of the upcoming 25 basis points (bps) interest rate cut by the Fed, following the conclusion of its two-day monetary policy meeting later on Wednesday.

The odds of such a move currently stand at about 90%, as traders eagerly await cues on the number of Fed rate reductions likely to be projected by the Federal Open Market Committee (FOMC) board members for 2026.

Fed Chairman Jerome Powell’s words and tone during the post-policy meeting press conference will be closely scrutinized to understand whether the expected December cut is just a risk-management move or the start of an aggressive easing cycle.

The FOMC board vote split, between the hawks and doves, will also play a pivotal role in the central bank’s guidance on interest rates.

The CME Group’s FedWatch Tool shows a little over 20% chance of another Fed rate cut in January, especially after Tuesday’s upbeat US JOLTS Job Openings data for September and October.

Job openings, a measure of labor demand, were up 12,000 to 7.670 million by the last day of October, Reuters reported, citing the Labor Department's Bureau of Labor Statistics.

Looking ahead, Gold’s next big move will play out on the Fed meeting’s outcome, with a hawkish tone and future rate projections to fuel a steep decline in non-yielding assets such as Gold.

On the contrary, if doves hold the upper hand, with the Fed’s message of more rate cuts needed to alleviate the labor market stress, Gold could see a fresh uptrend toward the record highs of $4,382.

Gold price technical analysis: Daily chart

In the daily chart, XAU/USD trades at $4,217.02. The 21-day Simple Moving Average (SMA) rises above the 50-, 100- and 200-day SMAs, underscoring a bullish alignment. All SMAs slope higher and price holds above them, with the 21-day SMA at $4,155.85 offering nearby dynamic support. The Relative Strength Index (RSI) sits at 61, signaling firm positive momentum without overbought conditions.

Measured from the $4,381.17 high to the $3,885.84 low, the 61.8% retracement at $4,191.95 has been reclaimed, shifting focus toward the 78.6% retracement at $4,275.16 as resistance. A daily close above that barrier would strengthen the upside bias, while failure to extend could see the advance stall and price drift back to test rising averages for support.

(The technical analysis of this story was written with the help of an AI tool)

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).

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