Gold Price Holds $4,188 as Traders Brace for Fed Call and $4,263 Resistance Test
Gold traded quietly throughout the European session, but XAU/USD only really held steady around $4,188 as traders took a step...
Quick overview
- Gold prices remained steady around $4,188 as traders await the Federal Reserve meeting this week.
- Futures markets indicate an 85% probability of a 25-basis-point rate cut, contributing to a weaker dollar and supporting gold.
- Geopolitical tensions, particularly regarding Russia and Ukraine, continue to drive safe-haven demand for gold.
- Gold's technical setup shows support at $4,177 and resistance at $4,263, with potential for a pullback if support is broken.
Gold traded quietly throughout the European session, but XAU/USD only really held steady around $4,188 as traders took a step back in the run-up to this week’s Federal Reserve meeting. The two-day policy event wraps up on Wednesday and is expected to provide us with updated economic projections – and that all-important “dot plot” which will give us a better idea of just how quickly rate cuts might start happening in 2025 and 2026.
Futures markets are now pricing in a strong 85% + probability of a 25-basis-point cut – which is why the dollar’s been stuck at multi-week lows. A softer dollar has been supporting gold, but investors are being cautious. With Powell’s press conference looming, we expect market conviction to start shifting all over the place – which is why so many traders are deciding to hold back, waiting to see how it all plays out before making any new moves.
Geopolitical Risks Continue To Fuel Safe-Haven Demand
The whole situation with Russia and Ukraine is still getting all the attention and keeping risk appetite pretty low. There are also rumblings that a future US administration might cut back on support for Kyiv, which only adds to the tension. This kind of uncertainty is exactly the kind of thing that pushes investors towards more stable assets – and gold has been one of the main beneficiaries of that.
The key factors driving gold’s performance right now are:
- The ongoing USD weakness, which is a big deal given all the Fed easing bets flying around
- The cross-border tensions that are still driving a lot of safe-haven flows
- Traders are a bit hesitant to make any big moves ahead of Powell’s press conference
Data Ahead: We’ll be Keeping a Close Eye on US Jobs Prints
Tuesday’s US job numbers release, which will include ADP employment and JOLTS job openings figures, is likely to spark some intraday movement in the USD pairs. However, the real story will be the tone the Fed takes on growth, inflation, and the timing of future rate cuts. Until then, gold is likely to stay stuck in its current range.
Gold’s Technical Setup: $4,177 Support, $4,263 Resistance
Right now, gold is hovering around $4,188 – and that’s just below the mid-line of its rising channel from mid-November. When you look at the 4-hour candles, you see smaller bodies and a lower high, suggesting that price is starting to lose a bit of momentum. Gold has also slipped below the 20 EMA at $4,203, which isn’t a great sign.
The next level of support is at $4,177, where channel support and other technical support converge. If we break below that, we’re looking at a bigger pullback, with the first major target at $4,130, followed by $4,083.
If gold can get above $4,263, it can regain some of its lost momentum, and we’ll be looking at $4,321, then the top of the channel near $4,371.
The RSI is currently drifting lower, indicating that momentum has cooled but isn’t quite dead yet. If gold can manage to hold its ground above $4,177, then the bounce looks pretty solid – but if we lose that support, then we might be looking at a bigger pullback back into November’s range.
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