Gold Price Forecast: XAU/USD retains bullish bias near record highs ahead of Fed decision

Gold (XAU/USD) attracts fresh buyers following the overnight modest pullback from the record high, though it remains below the $5,100 mark through the Asian session on Tuesday. Mounting global tensions, along with strong central bank buying and retail demand, continue to offer support to the precious metal. However, a modest US Dollar (USD) uptick and a positive risk tone act as a headwind for the commodity ahead of the key central bank event risk.

The US administration's aim to take over Greenland and an escalation of friction with NATO raised some doubts about trust in the alliance. Adding to this, US President Donald Trump threatened to impose a 100% tariff on goods imported from Canada over its potential trade deal with China. Although Prime Minister Mark Carney said that Canada has no intention of pursuing a free trade deal with China, the developments reignited trade-war fears and remain the main driver behind the commodity's record-setting rally.

On the geopolitical front, Russia has drawn a hard red line in peace negotiations with Ukraine during the US-brokered peace talks in Abu Dhabi last week. The trilateral talks ended without a deal on Saturday as Ukraine outright rejected Russia's demand to cede all of the Donbas region to end the nearly four-year war. This, along with dovish US Federal Reserve (Fed) expectations, also contributes to driving flows towards the non-yielding Gold and backs the case for an extension of the recent well-established uptrend.

Despite reduced bets for more aggressive policy easing by the Fed, traders are still pricing in the possibility that the US central bank would lower borrowing costs two more times in 2026. Adding to this, the uncertainty around Trump’s trade policies and the revival of the so-called 'Sell America' trade dragged the USD to its lowest level since September 2025 on Monday. The USD bears, however, seem hesitant and opt to wait for more  about the Fed's rate-cut path before positioning for a further depreciating move.

The US central bank is widely expected to keep rates unchanged at the end of a two-day policy meeting on Wednesday. Hence, the spotlight will be on Fed Chair Jerome Powell's comments during the post-meeting press conference, which will play a key role in influencing the near-term USD price dynamics and infusing volatility in the markets. This, in turn, would provide a fresh impetus to the Gold. Nevertheless, the fundamental backdrop suggests that the path of least resistance for the bullion remains to the upside.

XAU/USD 4-hour chart

Technical Analysis

An ascending parallel channel frames the advance, with the upper boundary near $5,158.99 capping immediate upside for the Gold. However, the Relative Strength Index (RSI) at 70.25 is overbought and warns that gains could stall unless momentum re-accelerates. Moreover, the Moving Average Convergence Divergence (MACD) histogram has slipped into negative territory and is widening, indicating the MACD line below the Signal line and a build-up of bearish momentum around the zero mark.

On the downside, the lower end of the ascending channel aligns near $4,973.57 and should act as a tailwind for the Gold. If sellers extend control as flagged by the negative MACD tone, the XAU/USD could extend the corrective decline. That said, the RSI holding near 70 would favor consolidation over a deeper reversal. A decisive close below the channel base would undermine the bullish structure and shift focus to lower levels.

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