Gold traders eye FOMC decision for direction. Key points to watch

FUNDAMENTAL OVERVIEW

Gold briefly dipped below the key $4,300 support level this week, but a confirmed break has not occurred as the metal entered a consolidation phase. Some buying interest has emerged this morning, though this may only represent noise before the FOMC decision scheduled for later today.

The Federal Reserve's decision could spark significant price movements, particularly if the outcome differs from market expectations. A 25-basis-point rate hike is widely anticipated, with possibly one or two dissenting votes in favor of holding rates steady. This meeting will also include the release of the Summary of Economic Projections and the Dot Plot.

Market participants will pay close attention to the Dot Plot, where the Fed is expected to forecast two additional rate increases — one in 2026 and one in 2027. This projection would fall short of current market pricing, which anticipates three more rate hikes by the end of 2027. Fed Chair Warsh is likely to avoid detailed forward guidance, instead reiterating his message from the Jackson Hole symposium.

A signal from the Fed indicating three or more additional rate increases would likely be interpreted as a hawkish surprise, putting downward pressure on gold. Conversely, a projection of just one or two more rate hikes could be seen as dovish, potentially providing a boost to gold prices.

Developments in the Middle East remain another major focus, with oil prices continuing to trade above $100, fueling inflation concerns amid worsening disruptions. Oil has been the primary market driver recently; any de-escalation in the Middle East could push oil lower and lead to a dovish repricing, which might ultimately support gold.

For now, the fundamentals suggest further downside for gold, as a change in the picture would require either a de-escalation in the Middle East or a dovish Fed.

GOLD TECHNICAL ANALYSIS – DAILY TIMEFRAME

On the daily chart, gold rebounded yesterday, rising back above the key $4,300 support level. Buyers are likely to continue stepping in around these levels, with a defined risk below the support to position for a rally toward the $4,890 level. Sellers, however, will be looking for a break below support to pile in for a drop to the $3,885 level next.

GOLD TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME

On the 4-hour chart, a downward trendline defines the bearish structure. A pullback to the trendline could see sellers lean on it with a defined risk above, positioning for a drop to the $3,885 level. Buyers will look for a break higher to increase bullish bets toward the $4,890 level, with the $4,510 level as the first target.

GOLD TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME

On the 1-hour chart, a minor downward trendline is acting as resistance. Sellers are expected to step in around the trendline with a defined risk above it to push prices to new lows. Buyers will look for a break to extend the rally toward the next trendline. The red lines define the average daily range for today.

UPCOMING CATALYSTS

Today features the FOMC rate decision. Tomorrow brings the US Jobless Claims figures. Traders will also monitor developments in the Middle East closely.