Gold Price Forecast: XAU/USD consolidates below $4,350 ahead of Fed decision

Gold (XAU/USD) trades cautiously below $4,350 on Wednesday as investors refrain from taking large positions ahead of the Federal Reserve (Fed) monetary policy decision. A modest pullback in the US Dollar (USD) provides some support to the precious metal, although the sharp rise in US Treasury yields limits its upside potential.

The Fed is expected to raise interest rates by 25 basis points at the conclusion of Wednesday's meeting. Attention will primarily focus on the updated economic projections, the dot plot and comments from Fed Chair Kevin Warsh, which could provide fresh clues about the future path of interest rates.

Meanwhile, tensions in the Middle East and risks of disruptions to Oil supply continue to fuel inflationary pressures and safe-haven demand. These factors provide support to Gold, although elevated US yields and prospects of further monetary tightening by the Fed encourage traders to remain cautious ahead of the central bank's announcement.

In the daily chart above, XAU/USD trades at $4,341.86. The metal hovers just above the 100-day simple moving average (SMA) at $4,326.81, but remains well capped by the 200-day SMA near $4,540.24 and the broader downward resistance structure, keeping the broader tone neutral to slightly bearish. The Relative Strength Index (14) around 48 underscores a lack of strong directional momentum, suggesting price is consolidating rather than trending decisively.

On the topside, initial resistance is seen at the 200-day SMA around $4,540.24, with a stronger barrier aligning near the horizontal resistance at roughly $4,697.48, while the bearish trend line context also weighs. On the downside, immediate support comes from the latest low at $4,253.78, and a break below this area would expose the more substantive horizontal floor around $3,945, where buyers would likely attempt to reassert control.

In the one-hour chart above, the metal holds a neutral to slightly constructive bias as it trades above the 100-period simple moving average (SMA) near $4,324, yet remains capped below the 200-period SMA around $4,371 and the descending resistance trend line coming in close to $4,361. A firm Relative Strength Index (RSI) around 64 suggests bullish momentum is building, but the pair still needs to overcome this confluence of nearby overhead barriers to unlock a stronger upswing.

On the topside, initial resistance is aligned at the descending trend-line hurdle near $4,361, followed by the 200-period SMA around $4,371, with a more distant horizontal barrier seen at $4,511. On the downside, immediate support is provided by the 100-period SMA at roughly $4,324, ahead of more substantial horizontal support near $4,253, where buyers would likely step in to defend the broader uptrend on this timeframe.

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