Gold flat lines above $5,000 as Middle East tensions and Fed decision loom

Gold (XAU/USD) reverses a modest intraday dip and trades just above the $5,000 psychological mark during the first half of the European session on Wednesday. The commodity, however, remains confined in a familiar range held since the beginning of this week as traders seem reluctant to place directional bets ahead of the crucial FOMC decision. The US Federal Reserve (Fed) is widely expected to maintain the status quo and keep interest rates steady at the end of a two-day meeting.

The market focus, however, will be on the accompanying policy statement and updated economic projections, including the so-called dot plot. Moreover, Fed Chair Jerome Powell's comments during the post-meeting press conference will be scrutinized closely for more cues about the path of future interest rates amid fears of a war-driven spike in inflation. This, in turn, will influence the US Dollar (USD) price dynamics and provide a fresh impetus to the non-yielding yellow metal.

Meanwhile, the US-Israel attacks on Iran and the effective closure of the Strait of Hormuz – a critical chokepoint handling around 20% of global oil supply – led to severe disruption of energy trade. This has been fueling inflationary concerns and forcing traders to trim their bets for more interest rate cuts by the Fed in 2026. In fact, the current market pricing indicates a significant shift in market expectations from multiple rate reductions to potentially just one in September, October or December.

This, in turn, assists the USD to stall a two-day-old retracement slide from its highest level since May 2025 and turns out to be a key factor acting as a headwind for the Gold price. However, heightened geopolitical uncertainties continue to benefit traditional safe-haven assets and limit the downside for the precious metal, warranting caution for bearish traders.

Iranian authorities confirmed that top security official, Ali Larijani, and the head of the paramilitary Basij force, Gholamreza Soleimani, were killed in Israeli air strikes on Tuesday. Iran's army chief Amir Hatami said in a statement that Iran’s response to the assassination of the secretary of the Supreme National Security Council "will be decisive and regrettable." Meanwhile, the US military targeted sites along Iran’s coastline near the Strait of Hormuz. This, along with the risk of a further escalation of conflicts in the Middle East, could offer some support to the Gold. Meanwhile, policy updates by other major central banks – the European Central Bank (ECB), the Bank of Japan (BoJ), and the Bank of England (BoE) – should produce some trading opportunities around the XAU/USD pair during the latter part of the week.

(This story was corrected on March 18 at 09:07 GMT to say that market expectations have shifted from multiple rate reductions by the Fed to potentially just one in either September, October, or December.)

XAU/USD 4-hour chart

Gold might continue to attract fresh sellers near 200-SMA pivotal support breakpoint on H4

The near-term bias is mildly bearish as the precious metal has slipped beneath the 200-period Simple Moving Average (SMA) on the 4-hour chart and the upward-sloping trend line support. The Moving Average Convergence Divergence (MACD) line has turned higher above its Signal line but remains close to the zero mark, suggesting only tentative recovery attempts within a broader softening backdrop. The Relative Strength Index (RSI) near 39 stays below the 50 midline, indicating prevailing bearish pressure despite the recent stabilization.

Immediate resistance emerges at the 200-period SMA around $5,061, and a recovery above this area would be needed to ease downside pressure and expose the recent swing region around $5,100 as the next barrier. On the downside, initial support is located at the recent low near $4,985, with a sustained break opening the way toward the previous reaction area around $4,950. A decisive move below $4,950 would strengthen the bearish extension toward the rising trend line’s prior consolidation band closer to $4,900, while only a firm reclaim of $5,061 and $5,100 would begin to neutralize the current negative tone.

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