Gold price traders seem non-committed amid the usual pre-Fed lull

Gold price (XAU/USD) remains on the defensive below the $3,400 mark through the first half of the European session as traders opt to wait for the outcome of the highly-anticipated FOMC meeting. With a no-interest rate change decision fully priced in, the so-called dot plot, alongside Fed Chair Jerome Powell’s comments, will be scrutinized for cues about the future rate-cut path. This will play a key role in influencing the near-term US Dollar (USD) price dynamics and provide some meaningful impetus to the non-yielding yellow metal.

Heading into the key central bank event risk, expectations that the Fed would resume its rate-cutting cycle in September failed to assist the USD to capitalize on the previous day's positive move to the weekly high. Furthermore, the Middle East conflict and trade-related uncertainties continue to weigh on investors' sentiment, which, in turn, offers some support to the safe-haven Gold price. This makes it prudent to wait for some follow-through selling before positioning for an extension of this week's pullback from a nearly two-month peak.

Daily Digest Market Movers: Gold price looks to Fed for fresh impetus amid rising geopolitical tensions

• Investor attention remains firmly on the upcoming Federal Reserve interest rate decision, due later this Wednesday. The US central bank is expected to keep its benchmark rate unchanged amid concern that US President Donald Trump's tariffs could push up consumer prices.
• Hence, the accompanying policy statement, which includes the updated “dots plot”, and Fed Chair Jerome Powell's comments during the post-meeting press conference will be scrutinized closely for cues about the future rate-cut path. The outlook, in turn, should influence the Gold price.
• Heading into the key central bank event risk, the disappointing US macro data released on Tuesday pointed to a softening economy and reaffirmed bets that the Fed will lower borrowing costs in September. This keeps a lid on the overnight US Dollar rally to the weekly peak.
• The US Census Bureau reported that Retail Sales declined by 0.9% in May compared to a contraction of 0.7% expected and a 0.1% dip in April. Moreover, US Industrial Production fell short of estimates and contracted 0.2% in May following a revised 0.1% rise a month earlier.
• Meanwhile, the conflict and continued aerial exchanges between Israel and Iran continued for the sixth straight day. Adding to this, Trump ramped up his rhetoric and demanded Iran’s unconditional surrender, fueling speculations over possible US involvement in the war.
• On the trade-related front, Trump told reporters on board Air Force One that tariffs on the Pharma sector are 'coming soon.' This adds a layer of uncertainty ahead of the July 9 deadline for higher reciprocal US tariffs and continues to weigh on investors' sentiment.

Gold price needs to find acceptance above $3,400 to back the case for meaningful intraday gains

From a technical perspective, the formation of an ascending channel points to a well-established short-term uptrend. Adding to this, positive oscillators on the daily chart suggest that any intraday slide might still be seen as a buying opportunity, which should help limit the downside for the Gold price near the $3,340-3,335 area, or the lower boundary of the trend-channel. A convincing break below the latter, however, would negate the positive outlook and shift the bias in favor of bearish traders.

On the flip side, the $3,400 mark might continue to act as an immediate hurdle, above which the Gold price could climb to the $3,434-3,435 region. Some follow-through buying, leading to a subsequent strength beyond the $3,451-3,452 area, or the multi-week top touched on Monday, should allow the Gold price to challenge the all-time peak, around the $3,500 psychological mark touched in April. The said handle coincides with the ascending channel barrier, which if cleared will be seen as a fresh trigger for bulls.