Gold extends the range play above $4,300; looks to Fed rate decision for fresh impetus

Gold (XAU/USD) continues with its struggle to gain any meaningful traction and remains on the defensive through the first half of the European session on Wednesday as traders seem hesitant ahead of the crucial FOMC policy decision.

In the meantime, the optimism over an interim US-Iran peace deal undermines the safe-haven US Dollar (USD), which continues to act as a tailwind for the bullion. The commodity, however, remains below the weekly high, touched on Monday, and the technically significant 200-day Simple Moving Average (SMA), warranting caution for bullish traders.

The US and Iran agreed to a framework peace deal intended to end the war that began earlier in 2026. The initial memorandum of understanding (MOU) establishes a 60-day ceasefire, the reopening of the Strait of Hormuz, and sets the stage for technical negotiations over Iran's nuclear program. Other details about the agreement remain scarce amid some contradictory claims about what’s in it. US President Donald Trump said that the MoU will state that Tehran will never have a nuclear weapon, while Iran’s state media reported that the country had not yet entered into detailed negotiations on the nuclear issues.

Adding to this, reports suggest that the agreement includes plans for a $300 billion private fund to trigger investment in Iran, but Trump called it "fake news." This keeps investors on edge and holds back the USD bears from placing aggressive bets ahead of the key central bank event risk. The US Federal Reserve (Fed) is scheduled to announce its rate decision later today and is widely expected to leave policy rates unchanged. Furthermore, the central bank is seen removing the easing bias as inflation is proving stickier than anticipated. Hence, the focus will be on updated economic projections, including the so-called dot plot.

Moreover, investors will closely scrutinize the new Fed Chair Kevin Warsh's post-meeting press conference for cues about the future policy path. In the meantime, markets have been unwinding the worst-case inflationary scenarios and hawkish Fed expectations built up during the US-Iran conflict. However, traders are still assigning around a 60% chance that the US central bank will raise interest rates by 25 basis points (bps) in December. Hence, a dovish shift in the Fed's stance is needed before placing fresh bearish bets on the USD and positioning for an extension of the Gold's recovery from the year-to-date low, touched last week.

XAU/USD daily chart

Gold traders seem hesitant below 38.2% Fibo.; $4,445-$4,450 confluence holds the key

From a technical perspective, the XAU/USD pair remains capped near the the 38.2% Fibonacci retracement level of the April-June downfall and beneath the declining 200-day SMA, keeping the broader tone bearish. Moreover, the Relative Strength Index (RSI) around 44 and a slightly positive Moving Average Convergence Divergence (MACD) reading hint at stabilizing but not yet convincing upside momentum.

Hence, any subsequent move up might confront an immediate hurdle near the $4,400 mark ahead of the $4,445-$4,450 confluence – comprising the 50% Fibo. level and the 200-day SMA. A daily close above the said resistance would be needed to ease bearish pressure and open the way toward the 61.8% level near $4,560, and the $4,707 and $4,893 Fibo. barriers higher up. On the flip side, immediate support emerges at the 23.6% retracement around $4,227, ahead of the structural floor at the recent swing low near $4,022, where a break would reinforce the prevailing bearish bias and expose deeper losses.

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