Gold Price Forecast: XAU/USD holds near record highs ahead of Fed

XAU/USD Current price: $3,034.75

• The Federal Reserve is expected to maintain the benchmark interest rate on hold.
• Market players will likely react to sentiment and trade-war effects on the Fed’s decisions.
• XAU/USD could correct lower, but buyers are still willing to add on dips.

Spot Gold peaked early on Wednesday at $3,045.44, holding nearby ahead of the Federal Reserve’s (Fed) monetary policy announcement. Market players hope Chairman Jerome Powell will deliver some clues about the path of monetary policy other than the current wait-and-see stance amid growing uncertainty.

The Fed is expected to keep the benchmark interest rate on hold, floating between 4.25% and 4.50%, after announcing a pause in monetary loosening in December. Ahead of the announcement, investors priced in two rate cuts in 2025, but not before the second half of the year.

Policymakers will also release the Summary of Economic Projections (SEP), a document expressing their expectations for this year and the next ones. Finally, Chair Powell will offer a press conference, in which the focus will likely gyrate around tariffs and their potential effect on the United States (US) economy.

Generally speaking, a hawkish Fed tends to result in a firmer USD, while a dovish one pressures the American currency. However, the USD will hardly find demand if the Fed is hawkish amid fears of an economic setback.

XAU/USD short-term technical outlook

The daily chart for the XAU/USD pair shows that the positive momentum persists despite overbought conditions. The Momentum indicator aims firmly higher, supporting another leg north, while the Relative Strength Index (RSI) indicator stabilized at around 72, awaiting news. At the same time, the pair is developing above all its moving averages, with the 20 Simple Moving Average (SMA) providing dynamic support at around $2,936.

The 4-hour chart shows technical indicators eased from extreme levels but are far from suggesting an upcoming slide. Additionally, the 20 SMA keeps heading firmly higher, currently at around $3,011, while holding far above the longer ones. Bulls retain control and corrective slides are likely to attract buyers once the dust settles.

Support levels:3,011.00 2,996.90 2,978.40

Resistance levels: 3,040.00 3,055.00 3,070.00