Gold looks to build on impressive rally beyond $5,300 as traders await Fed decision

Gold (XAU/USD) continues scaling new all-time peaks through the first half of the European session on Wednesday, with bulls looking to build an eight-day winning streak beyond the $5,300 mark . Investors continue to take refuge in traditional safe-haven assets on the back of economic and geopolitical uncertainties, fueled by US President Donald Trump's decisions. Furthermore, worries about the US Federal Reserve's (Fed) independence and prospects for lower interest rates in the US contribute to driving flows towards the non-yielding yellow metal.

Meanwhile, the US Dollar (USD) staged a goodish recovery from its lowest level since February 2022, touched on Tuesday, amid some repositioning trade ahead of the key central bank event. This, however, does little to dent the underlying bullish sentiment surrounding the Gold, which also seems rather unaffected by the upbeat mood across equity markets. Traders now look to the outcome of a two-day FOMC meeting for more cues about the rate-cut path, which will drive the USD demand and provide some meaningful impetus to the XAU/USD pair.

Daily Digest Market Movers: Gold buying remains unabated as safe-haven flows offset USD rebound

• The recent short-lived escalation of friction between the United States and NATO, over US President Donald Trump's ambitious aim to acquire Greenland, raised doubts about trust within the NATO alliance. This, along with the protracted Russia-Ukraine war and trade-related uncertainties, continues to fuel the safe-haven Gold's blistering rally witnessed since the beginning of last week.
• Trump accused Canada of potentially becoming a gateway for Chinese goods into the US and threatened to impose a 100% tariff on goods imported from Canada over its potential trade deal with China. Prime Minister Mark Carney said that Canada has no intention of pursuing a free trade deal with China, the development reignited trade-war fears and benefited the precious metal.
• 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 turns out to be another factor lending support to the commodity.
• Meanwhile, Trump said on Tuesday that he will soon announce his pick to serve as the next head of the Federal Reserve, and predicted interest rates would decline after the new chair takes over. This comes on top of growing market expectations that the US central bank would lower borrowing costs two more times in 2026 and dragged the US Dollar to its lowest level since February 2022.
• The USD, however, stages a goodish recovery during the Asian session on Wednesday as bears opt to lighten their bets amid some repositioning ahead of the highly anticipated FOMC decision. The spotlight would be on the post-meeting press conference, where comments from Fed Chair Jerome Powell might infuse volatility in the markets and provide a fresh impetus to the XAU/USD pair.

Gold shrugs off overbought conditions as ascending channel breakout comes into play

The ascending channel from $4,696.64 supports the uptrend, with resistance near $5,274.38. The Moving Average Convergence Divergence (MACD) line extends above the Signal line, with both above zero, reflecting strengthening bullish momentum. The histogram has begun to contract, suggesting momentum may be cooling into resistance. RSI at 77 (overbought) warns that upside could be capped near the channel top.

Should the XAU/USD pair pause, initial support sits at the channel floor near $5,096.12, keeping the series of higher lows intact. A clear break above the upper boundary would extend the advance, while a rejection there could trigger consolidation back toward the lower band. The MACD remains firmly positive even as the histogram narrows, while the RSI’s overbought reading favors a period of digestion before fresh trend extension. Overall, the channel bias stays bullish, with dips expected to be shallow while the structure holds.

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