Gold price flat lines above $2,760 level as traders keenly await FOMC decision

Gold price (XAU/USD) struggles to capitalize on the previous day's positive move and oscillates in a narrow trading band through the first half of the European session on Wednesday amid mixed cues. A generally positive tone around the equity markets is seen as a key factor acting as a headwind for the safe-haven precious metal. That said, bets that the Federal Reserve (Fed) will cut interest rates further in 2025, sliding US Treasury bond yields and the emergence of some US Dollar (USD) selling lend support to the non-yielding yellow metal.

Traders also seem reluctant to place aggressive directional bets and opt to wait on the sidelines ahead of the key central bank event risk – the outcome of a two-day FOMC policy meeting. The Fed is scheduled to announce its policy decision later during the US session, which will play a key role in influencing the near-term USD price dynamics and provide some meaningful impetus to the Gold price. In the meantime, concerns about US President Donald Trump's tariff plans might continue to benefit the safe-haven precious metal and limit the downside. 

Gold price draws support from a combination of factors; traders seem non-committed ahead of Fed

• Calmer conditions across global markets dent demand for traditional safe-haven assets and fail to assist the Gold price to build on Tuesday's positive move ahead of the key central bank event risk. 
• The yield on the benchmark 10-year US government bond languishes near a one-month trough, capping the overnight US Dollar recovery and acting as a tailwind for the non-yielding yellow metal. 
• Investors remain concerned about the potential economic fallout from US President Donald Trump's plans to impose tariffs on imported computer chips, pharmaceuticals, aluminum, steel and copper. 
• The move, aimed at pushing the companies to boost production in the US, could trigger a fresh wave of global trade wars and might continue to act as a tailwind for the safe-haven precious metal.
• Data released on Tuesday by the US Census Bureau showed that Durable Goods Orders declined 2.2% in December, compared to a 2% fall in November and market expectations for a 0.8% rise.
• Separately, the Conference Board (CB) reported that the Consumer Confidence Index dropped to 104.1 in January from 109.5 in the previous month and the Present Situation Index fell to 134.3. 
• Meanwhile, the market focus remains glued to the Federal Reserve's policy decision first meeting this year, which will drive the US Dollar demand and provide a fresh impetus to the XAU/USD. 

Gold price remains on track to challenge the all-time peak, around $2,970 area touched in October

From a technical perspective, the recent breakout through the $2,720-2,725 horizontal barrier and positive oscillators on the daily chart suggest that the path of least resistance for the Gold price remains to the upside. A subsequent move above the $2,772-2,773 area will reaffirm the constructive outlook and lift the XAU/USD beyond the $2,786 area, or the highest level since October 2024 touched last Friday, towards the all-time peak, near the $2,790 zone. Some follow-through buying, leading to a strength beyond the $2,800 mark, will be seen as a fresh trigger for bullish traders and pave the way for an extension of a well-established uptrend witnessed over the past month or so.

On the flip side, weakness below the $2,755-2,753 immediate support might continue to attract some buyers and remain limited near the weekly swing low, around the $2,730 area touched on Monday. Some follow-through selling below the $2,725-2,720 resistance-turned-support could pave the way for deeper losses and drag the Gold price to the $2,707-2,705 area en route to the $2,684 region.