Gold Price Forecast: XAU/USD looks to the Fed for the next big move

Gold is attempting a tepid bounce from six-day lows near $4,000 in Wednesday’s Asian trades, awaiting the US Federal Reserve (Fed) monetary policy outcome to determine the next major move.

Gold jittery amid fresh Iran risks, ahead of Fed

Gold is consolidating two back-to-back days of losses, with traders repositioning ahead of the Fed event risks.

In doing so, Gold is trying to build on the intraday bounce, as the US Dollar (USD) holds overnight losses, following soft US Goods Trade Balance data for June and a profit-taking pullback from three-month highs.

However, resumption of hostilities in the Middle East fuels a sharp 4% rebound in Oil prices, reigniting inflation concerns and boosting hawkish Fed expectations, which limits the renewed upside in the non-yielding bullion.

US Central Command: carried out precision strikes in Iraq targeting Iran-backed groups planning attacks on US forces and Saudi oil facilities. This followed the IRGC firing multiple ballistic missiles from Iran at US troops in the Middle East and on oil facilities in Saudi Arabia.

Further, Gold traders refrain from creating any fresh positions before the Fed policy announcements, amid growing real risk of the Fed opting for an interest rate hike this week.

Markets are pricing in roughly a 30% chance of a 25-basis-point (bps) Fed rate hike at the July meeting, slightly up from 25% seen over a week ago, according to the CME Group’s FedWatch Tool, while expecting an 80% probability of a hike in September.

Beyond the interest rate decision, the vote split and new Fed Chair Kevin Warsh’s tone during the post-policy meeting will be closely scrutinized for fresh hints on September rate hike prospects.

If policymakers acknowledge persistent inflation, the vote split proves more hawkish than expected, or Warsh explicitly leaves the door open for a rate hike later this year, the US Dollar and Treasury yields could strengthen, putting renewed pressure on non-yielding Gold.

Conversely, if Warsh downplays the inflationary impact of higher energy prices and reiterates that future policy decisions will depend on incoming economic data, markets could scale back September rate hike bets. That would likely weaken the US Dollar, pull Treasury yields lower, and fuel a sustained Gold price recovery.

Gold price technical analysis: Daily chart

In the daily chart, XAU/USD trades at $4,028.78, extending a corrective phase below all major moving averages and keeping a bearish near-term bias in place. The 21-day simple moving average (SMA) at roughly $4,070 sits just above spot as immediate resistance, with the 50-day SMA near $4,202 reinforcing the broader topside cap, while the 100-day and 200-day SMAs clustered around $4,447–4,491 further above suggest the medium-term trend remains under pressure. The Relative Strength Index (14) hovering around 44 stays below the neutral 50 line, hinting that downside momentum is still dominant, even if oversold conditions are not yet evident.

On the topside, initial resistance is aligned at the 21-day SMA around $4,070, followed by the 50-day SMA near $4,202, where renewed selling interest could emerge if prices attempt a rebound. Higher up, the 100-day SMA at about $4,447 and the 200-day SMA near $4,491 form a distant resistance band that would need to be reclaimed to ease the prevailing bearish structure. On the downside, with no nearby moving-average supports, traders may look to recent price lows and psychological round numbers below $4,000 as potential interim demand zones, but failure to hold those areas would leave XAU/USD vulnerable to a deeper slide.

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

H2 2026 outlook for Gold

Analysts at Commerzbank report that they have "lowering our year-end gold price forecast to USD 4,500 per troy ounce (previously: USD 4,800)," citing the "significant fall in prices" driven by the Fed "adopting a more hawkish stance than expected." Even so, they see room for a rebound from current levels, arguing that "current market expectations of Fed rate hikes [are] excessive" and that "Fed interest rates will remain unchanged until the end of the year."

In their baseline scenario, "the Fed would likely refrain from raising interest rates and might even cut its key interest rate from mid-2027 onwards, as the 2% target would then be reached in spring 2027." Commerzbank says this would "provide[] scope for a further price increase next year to USD 5,000 per troy ounce by the end of 2027 (previous forecast: USD 5,200)." However, they caution that "without a reversal in interest rate expectations, a lasting return of ETF investors and a recovery in the gold price are unlikely."