- Gold price hits a fresh record high on Wednesday amid geopolitical risks and trade jitter.
- Fed rate cut bets further benefit the non-yielding yellow metal and remain supportive.
- A modest USD bounce caps the commodity ahead of the crucial FOMC policy decision.
Gold price (XAU/USD) extends its consolidative price move near the record high through the first half of the European session on Wednesday as bulls pause for a breather ahead of the FOMC policy update. The Federal Reserve (Fed) will announce its decision later during the US session and is expected to keep the federal funds rate unchanged at the current range of 4.25% to 4.50%. Hence, the focus will remain glued to the accompanying policy statement and the updated economic projections, which include the so-called dot plot. Apart from this, Fed Chair Jerome Powell’s comments at the post-meeting press conference will be looked upon for cues about the future rate-cut path. This will influence the US Dollar (USD) price dynamics and provide some meaningful impetus to the non-yielding yellow metal.
Heading into the key central bank event risk, some repositioning trade assists the US Dollar (USD) to gain positive traction and snap a three-day losing streak to its lowest level since October touched on Tuesday. This, in turn, is seen acting as a headwind for the Gold price, though the near-term bias seems tilted in favor of bullish traders. Market participants now seem convinced that the Fed will lower borrowing costs several times this year amid worries about a tariff-driven US economic slowdown. Apart from this, the uncertainty over US President Donald Trump’s aggressive trade policies and geopolitical risks should continue to underpin demand for the safe-haven bullion. This, in turn, suggests that any corrective pullback might still be seen as a buying opportunity and is more likely to remain limited.
Daily Digest Market Movers: Gold price retains bullish bias ahead of the Fed decision
- Gold price touches a fresh record high, around the $3,039 region on Wednesday as rising Middle East tensions and concerns about US President Donald Trump’s tariff plans continue to fuel demand for the safe-haven asset.
- Israeli airstrikes on Hamas targets in Gaza, killing more than 400 people. Israeli Prime Minister Benjamin Netanyahu said he ordered strikes because Hamas had rejected proposals to extend the ceasefire held since January.
- Trump has threatened to impose reciprocal and sectoral tariffs, which he said will come into effect on April 2. This comes on top of a flat 25% duty on steel and aluminum since February, fueling global trade war fears.
- Traders ramp up their bets that the Federal Reserve will have to lower interest rates this year by more than expected amid the rising possibility of an economic downturn on the back of the Trump administration’s aggressive policies.
- The current market pricing indicated the possibility that the Fed could lower borrowing costs by 25 basis points each at the June, July, and October monetary policy meetings, which further underpins the now-yielding yellow metal.
- The US Dollar stages a modest bounce from over a five-month low touched on Tuesday as traders opt to lighten their bearish bets ahead of the FOMC decision, scheduled to be announced later during the US session this Wednesday.
- The accompanying monetary policy statement and comments by Fed Chair Jerome Powell will be scrutinized closely for cues about the future rate cut path, which will drive the USD demand and influence the XAU/USD pair.
Gold price seems poised to prolong a well-established uptrend while above the $3,000 mark
The daily Relative Strength Index (RSI) is holding above the 70 mark, suggesting slightly overbought conditions. Heading into the key central bank event risk, this makes it prudent to wait for some near-term consolidation or a modest pullback before traders start positioning for any further appreciating move. Meanwhile, the recent breakout and acceptance above the $3,000 psychological mark suggests that the path of least resistance for the Gold price remains to the upside.
Meanwhile, any corrective slide could be seen as a buying opportunity and remain limited near the $3,005-3,000 area. This is followed by support near the $2,980-2,978 region, which if broken might prompt some technical selling and drag the Gold price to the $2,956 zone. The downward trajectory could extend further towards the $2,930 intermediate support before the XAU/USD eventually drops to the $2,900 mark en route to last week’s swing low, around the $2.880 region.
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