Gold (XAU/USD) struggles to capitalize on its modest intraday move higher and remains below the $4,350 level through the Asian session on Wednesday. The US Dollar (USD) pauses for a breather after touching a two-week high and offers some support to the commodity. Traders, however, seem hesitant to place aggressive directional bets and opt to wait on the sidelines heading into the key central bank event.
The US Federal Reserve (Fed) is scheduled to announce its decision later today and is widely expected to raise interest rates by 25 basis points (bps) at the conclusion of its September 15–16 meeting. The focus, meanwhile, will be on the Fed's updated economic projections, which include the so-called dot plot. Apart from this, Fed Chair Kevin Warsh's comments during the post-meeting press conference will be scrutinized for cues about the future policy path. The outlook, in turn, will play a key role in influencing the near-term USD price dynamics and provide a fresh directional impetus to the non-yielding Gold.
Meanwhile, energy-driven inflation risks underpin prospects for further tightening by the Fed. In fact, crude oil prices shot to a fresh high since May 20 on Tuesday amid growing concerns about supply disruption in the Middle East. Adding to this, a surge in public and corporate borrowing led to an extended global bond selloff, pushing the yield on the benchmark 10-year US Treasury bond beyond the 5% threshold for the first time since 2023 and to its highest level since 2007. Adding to this, escalating Middle East tensions should continue to underpin the safe-haven USD, which might cap the Gold price.
In the latest developments, Saudi Arabia issued security alerts over a range of territory – including the holy city of Mecca and the second-largest city, Jeddah – following a week of attacks from Iran-aligned Houthis in Yemen. The Saudi-led coalition has promised to respond “firmly” to missile and drone strikes by the Houthi group, raising the risk of further escalation of the regional conflict. Moreover, the US Central Command said it has redirected 103 commercial vessels as part of its blockade on Iranian maritime trade through the Strait of Hormuz, supporting oil prices and favouring USD bulls.
XAU/USD daily chart
Technical Analysis
The precious metal has been showing some resilience below the 50-day Simple Moving Average (SMA) and is now trading just above the 50% retracement level of the July-August upswing. That said, momentum oscillators have softened, with the Moving Average Convergence Divergence (MACD) in negative territory and the Relative Strength Index (RSI) hovering just below the 50 line. This, in turn, suggests that the upside traction is moderating even as the Gold stays above a key moving average.
Hence, any further move up could confront initial resistance at the 38.2% Fibonacci retracement near $4,413, which is followed by a stronger hurdle at the 23.6% retracement around $4,520, where prior supply could re-emerge. On the downside, immediate support aligns first at the 50.0% retracement close to $4,326, reinforced by the 50-day SMA at about $4,280. A break below the latter would expose the 61.8% retracement near $4,240 and deeper retracement supports at approximately $4,116 and $3,959.
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