Gold stays pressured before FOMC rate decision

FUNDAMENTAL OVERVIEW

Gold began the week under pressure as traders remained cautious due to high oil prices and the upcoming FOMC decision. On Friday, U.S. monthly core inflation came in higher than expected, confirming a September rate hike. The market now sees a 92% probability of a rate increase tomorrow.

Since a rate hike is already priced in, attention shifts to the dot plot and the Fed's message. The Fed is expected to signal another rate hike by year-end and possibly a further one in 2027. Only a small minority anticipate three or more increases.

Should the Fed indicate three or more hikes, that would likely surprise markets on the hawkish side and spark a gold selloff. Conversely, a projection of only one more hike could be seen as dovish and provide a lift to gold. The press conference probably won't reveal much because Warsh favors limited forward guidance.

Another key area of focus is the Middle East, where oil prices remain above $100, stoking inflation worries amid worsening disruptions and supply fears. Oil has been a major market driver lately. A de-escalation in the region could push oil lower and trigger a dovish repricing, which would ultimately support gold.

For now, the fundamentals point to further downside for gold, with a change in outlook requiring either de-escalation in the Middle East or a dovish Fed.

GOLD TECHNICAL ANALYSIS – DAILY TIMEFRAME

Gold probed below the key 4,300 support level, but bearish momentum has not increased. Buyers are looking for price to rise back above support to enter for a rally to 4,890. Sellers, meanwhile, will continue to sell near support with a defined risk above it, aiming for a decline to 3,885.

GOLD TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME

A downward trendline defines the bearish structure on the 4-hour chart. A pullback to the trendline would likely see sellers act with a defined risk above, positioning for a drop to 3,885. Buyers, seeking a break higher, would then increase bullish bets toward 4,890.

GOLD TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME

Gold is consolidating between 4,250 and 4,320 on the 1-hour chart. Buyers want a break higher to enter for a pullback to the trendline, while sellers seek a break lower to push to new lows. The red lines mark today's average daily range.

UPCOMING CATALYSTS

The FOMC rate decision is due tomorrow. Thursday brings U.S. jobless claims figures. Developments in the Middle East remain in focus as well.