Image Source: Pixabay
 

Gold (XAU/USD) posts modest losses on Wednesday with traders bracing for the Federal Reserve’s (Fed) monetary policy decision, along with Fed Chair Jerome Powell's press conference. At the time of writing, XAU/USD trades at $4,197 after reaching a daily peak of $4,218.

Bullion eases toward $4,200 as traders await the Fed’s rate call and economic projections for 2026
 

The markets are on pause, with US equities virtually flat, while US Treasury bond yields fall and the US Dollar remains sold. Market players have priced in a 90% probability that the Fed will cut rates, but it would push back against expectations for further easing towards 2026.

Two weeks ago, Fed Governor Christopher Waller and New York Fed President John Williams were the proxies for Powell and paved the way for Wednesday’s decision. Nevertheless, the division within the Federal Open Market Committee (FOMC) could force him to adopt a 'mildly hawkish' stance at the press conference.

Traders will also be looking for the Summary of Economic Projections (SEP), specifically the dot plot, which could delineate the interest rate path for 2026.
 

Fed Rate Curve towards 2026 - Source: Capital Edge
 

Speculation is growing that for next year, markets are pricing 50 basis points of easing, instead of three cuts, as revealed in a Bloomberg article. This is because Fed officials lack recent economic data, which was delayed due to the US government shutdown. The November Nonfarm Payrolls is set to be released on December 16, and the November Consumer Price Index (CPI) on December 18.

Daily digest market movers: Gold treads water amid a weaker US Dollar
 

• US Treasury yields are diving, with the 10-year benchmark note rate down two basis points at 4.162%. US real yields, which correlate inversely with Gold prices, are falling nearly three basis points to 1.902%, a tailwind for Bullion.
• The US Dollar Index (DXY), which tracks the Greenbacks’ performance against a basket of six peers, is down 0.22% to 99.01.
• The latest US Job Openings and Labor Turnover Survey (JOLTS) indicated that the labor market remains more resilient than anticipated, as vacancies unexpectedly rose by 7.67 million in October from 7.658 million, according to the Bureau of Labor Statistics (BLS), signaling firmer labor demand.
• Separately, ADP reported that private employers added an average of 4,750 jobs per week in the four weeks ending November 22, improving from the prior period’s 13,500 decline, suggesting an increasing demand for workers towards the year’s end.

Technical Analysis: Gold hovers around $4,200 amid dull session
 

Gold’s technical picture suggests that the uptrend might continue, but a slightly hawkish Fed could prompt traders to sell the yellow metal below the $4,200 milestone. Although momentum remains bullish, as shown by the Relative Strength Index (RSI), Bullion’s downside risks remain.

If XAU/USD drops below $4,200, the next support would be the 20-day Simple Moving Average (SMA) at $4,153, followed by the 50-day SMA at $4,090 and the $4,000 mark. On the flip side, if the Fed is dovish, Bullion could skyrocket towards $4,300 ahead of the record high of $4,381.
 

Gold daily chart

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