The Fed’s decision may guide the direction of gold
💡Message Strategy
Gold prices fell more than 1% as traders locked in profits after hitting an 8-week high, with attention turning to the Fed's policy decision and diplomatic signals from Iran. The move puts gold on track to form a bearish closing price reversal pattern, suggesting further consolidation if no new safe-haven demand emerges.
Safe-haven demand stagnates as Israel-Iran tensions ease
Geopolitical risks from the ongoing Israel-Iran conflict have been one of the key drivers of gold's recent gains. However, as reports emerged that Iran was willing to restart nuclear talks through an Arab intermediary, market reaction became muted.
These developments led to a more than 3% drop in crude oil prices and eased inflation concerns. Despite the continued tensions in the Middle East, the change still limited further gains for gold. U.S. Treasury yields were almost flat on the day, reflecting a decline in the market's urgent demand for traditional safe-haven assets.
A weaker dollar failed to support gold's gains
The U.S. dollar index (DXY) fell to 97.685, just above last week's multi-year low. Bearish sentiment persists, and new short positions may curb any rebound.
Gold's failure to rise despite a weaker dollar indicates overall hesitation in the market. Analysts pointed out that the lack of safe-haven inflows into the dollar and U.S. Treasuries highlights that traders are more focused on upcoming central bank guidance than geopolitical factors.
Fed outlook will dominate short-term price action
Traders are now awaiting the Fed’s decision on Wednesday, with expectations that interest rates will remain unchanged, but forward guidance will be key.
Gold could face new pressure if Fed Chairman Powell turns hawkish or suggests that interest rates will remain high for a long time. Any signs of policy normalization could boost the dollar and weaken gold’s appeal. However, a dovish tone or concerns about the persistence of inflation could strengthen support for gold near technical key levels.
Gold price forecast: If the $3310 range support is effective, the bullish trend remains
📊Technical aspects
From a technical perspective, gold is testing a key support area. A drop to around $3,380 could trigger new buying; if this level is lost, it will further test the $3,350 support level.
On the upside, resistance is close to $3,450, and if bullish momentum resumes, the all-time high of $3,500.20 is still possible.
For now, the forecast maintains a cautiously bullish tone, provided that the $3,310 support level remains solid and the Fed avoids turning hawkish.
💰 Strategy Package
Long Position:3375-3380
Short Position:3410-3420
