Gold rebounded above the $4,300 support level as traders position for today's FOMC rate decision. The dot plot's projected pace of future hikes, not the widely expected 25-basis-point move itself, is seen as the bigger swing factor for gold's next direction. Oil above $100 amid Middle East tensions keeps the fundamental bias tilted lower unless the Fed turns dovish.
Gold probed below the key $4,300 support this week but has not confirmed the breakout, getting stuck in consolidation instead. The metal rebounded yesterday, rising back above that support level, though the bounce could just be noise ahead of today's Federal Reserve decision.
Fed's dot plot outweighs the hike itself
The consensus is for the Fed to hike by 25 basis points, with potentially one or two dissenters voting for a hold. Alongside the decision, the Fed releases its Summary of Economic Projections and rate hike dot plot.
Traders are focused on the dot plot, where the Fed is expected to project two more hikes, one in 2026 and one in 2027 — below the market's current pricing of three more hikes by the end of 2027. Fed Chair Warsh is not expected to offer much fresh guidance and will likely just repeat his Jackson Hole message. A dot plot signaling three or more further hikes would likely be taken as a hawkish surprise and weigh on gold, while a forecast of just one or two more hikes could be read as dovish and give gold a boost.
Oil and Middle East tensions add pressure
Developments in the Middle East are the other major focus, with oil prices continuing to trade above $100 and fueling inflation concerns amid worsening disruptions. Oil has been the key driver of markets recently, so any de-escalation there could push oil prices lower and trigger a dovish repricing that ultimately supports gold. For now, the fundamentals point to further downside for gold unless a Middle East de-escalation or a dovish Fed changes the picture.
Technical levels to watch
On the daily chart, gold rebounded yesterday as the price rose back above the 4,300 support. Buyers will likely keep stepping in around these levels, risking below the support to position for a rally toward 4,890, while sellers want a break below support to open the door to 3,885.
The 4-hour chart shows a downward trendline defining a bearish structure: a pullback into that trendline could see sellers lean on it toward 3,885, while a break higher would extend bullish bets toward 4,890, with 4,510 as the first target. On the 1-hour chart, a minor downward trendline is acting as resistance, with sellers likely to defend it for new lows and buyers looking for a break to extend the rally.
Today brings the FOMC rate decision, followed tomorrow by US jobless claims figures, with traders also watching for further developments in the Middle East.
Source: Investinglive
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