- Gold price holds the previous rebound below $2,770 on Fed day.
- The US Dollar trades subdued amid risk recovery, boosting Gold price.
- The daily technical setup for gold prices remains bullish, but the Fed could spoil its party.
Gold price clings to recovery gains near $2,770 in Wednesday’s Asian trading. Gold buyers trade cautiously, heading into the critical Federal Reserve (Fed) policy announcement that is due later this Wednesday.
Gold price looks to Fed verdict for the next trading impetus
Markets are in a wait-and-see mode, anticipating the Fed will pause the interest rate cut and provide hints on the following policy move. Markets are pricing in almost 50 basis points (bps) of cuts this year, or two 25 bp reductions starting in June, according to LSEG data.
However, Fed Chairman Jerome Powell’s press conference will be closely scrutinized for the timing and the scope of further rate reductions under US President Donald Trump’s second term. Trump's immigration and trade policies are perceived as inflationary, as they could prompt the Fed to keep higher rates for longer, boding ill for the non-interest-bearing Gold price.
In case, Powell and his colleagues express their confidence in the path of disinflation and acknowledge weakening labor market conditions, markets could read that as a dovish hold, ramping up bets for future rate cuts, lifting Gold price to new record highs.
In the meantime, Gold price will continue to draw support from stabilizing risk sentiment, broadly subdued US Dollar and holiday-thinned conditions. China, Singapore, and Hong Kong markets also closed due to the Lunar New Year holiday break.
Markets recover from China’s low-cost artificial intelligence (AI) model - DeepSeek-led global AI sell-off as the focus now also remains on the earnings results from the US tech titans – Microsoft, Meta and Tesla due in the late American session on Wednesday.
If earnings disappoint and budget forecasts leave investors unconvinced, a renewed global tech sell-off could be in the offing, with markets resorting to ‘sell-everything’ mode. In such a case, Gold price could reverse any reaction to the Fed policy announcements or extend the downside on a potential hawkish hold.
Gold price technical analysis: Daily chart
The technical setup on the daily time frame remains in favor of Gold price. Therefore, the bright metal will likely be a ‘buy-the-dips’ trade.
The 14-day Relative Strength Index (RSI) holds comfortably above the midline, currently near 65, keeping Gold buyers hopeful.
Adding credence to the bullish potential, the 50-day SMA closed above the 100-day SMA last Thursday, confirming a Bull Cross.
Gold price needs a daily candlestick closing above the symmetrical triangle target of $2,785 or record high of $2,790 to initiate a fresh uptrend.
The next relevant upside targets are $2,800 and the $2,850 psychological barrier.
On the downside, the immediate support will be seen at the previous day’s low of $2,735.
Sellers will then aim for the $2,700 round level, where the 21-day SMA coincides. The last line of defense for buyers is the $2,680 static support.
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD slips back below 1.0900 on poor US Retail Sales
EUR/USD now gives away part of the earlier advance and retests the area below 1.0900 the figure on the back of the mild bounce in the US Dollar after US Retail Sales disappointed expectations in February. In the meantime, prudence among traders is expected to pick up in light of the FOMC event on Wednesday.
GBP/USD treads water near 1.2970, USD remains offered
GBP/USD resumes its recent uptrend and navigates around the 1.2970 region at the beginning of the week on the back of the renewed selling pressure hurting the Greenback. Investors' focus, in the meantime, remains on the BoE meeting due later in the week.
Gold keeps the bid tone unchanged near $3,000
Gold prices has started the week on a positive tone and maintains their trade around the key $3,000 mark per troy ounce on the back of the modest pullback in the Greenback and mixed US yields across the curve,
Five Fundamentals for the week: Fed leads central bank parade as uncertainty remains extreme Premium
Central bank bonanza – perhaps its is not as exciting as comments from the White House, but central banks still have sway. They have a chance to share insights about the impact of tariffs, especially when they come from the world's most powerful central bank, the Federal Reserve.
Top Formula 1 crypto sponsors rally, racing fans gain from Binance Coin, OKB, ApeCoin and Crypto.com
The 2025 Formula 1 season kicked off in Australia last week with a lineup of crypto sponsors for half of the teams. Racing giants are powered by sponsors like crypto exchanges Binance, OKX, ApeCoin, and Crypto.com, among other NFT and trading platforms. Binance Coin, OKX, ApeCoin, Crypto.com, and Alchemy Pay’s tokens rallied as crypto sponsors made their mark in the racing event.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.