Gold price traded flat near the $3,400 mark in Tuesday’s early European session, as market participants avoided major positions ahead of the FOMC meeting. This hesitancy shows that the Federal Reserve needs to make its position on rate cuts clearer. Now, attention turns to Fed Chair Jerome Powell’s remarks and policy statement. Future value changes in gold and the US dollar will likely be dictated by these comments. In the meantime, safe-haven assets are firm as a result of trade tensions and Middle Eastern geopolitical tensions.
Traders Pause as FOMC Meeting Sparks Uncertainty
Before the Fed’s announcement, there were few new triggers and conflicting market expectations. This was a major factor behind the gold rate’s lack of momentum. Also, the recent decline in the US dollar, now at a three-year low, is supporting the stability of gold. Moreover, constant geopolitical tensions have revived investor desire for safe-haven assets, which has given gold a minor tailwind. Nonetheless, there remains limited upside until the policy path of the Fed is locked in.
Middle East Crisis Supports Safe-Haven Appeal
Iran has been said to warn that it would unleash its boldest missile strike ever in response to Israel’s purported attack on Iran’s state media. Also, former President Donald Trump cut short his stay at the G7 Summit as geopolitical tensions rose. He is calling for an emergency meeting of the National Security Council.
Three oil tankers have been reported to have caught fire in the Gulf of Oman off the Strait of Hormuz, raising alarm. The location is a critical shipping lane, and recollections of the 2019 accidents blamed on Iran have been revived. Especially during the Asian session, these developments keep pushing the gold price higher during times of market fear.
Even though the US dollar slightly increased due to repositioning before the FOMC meeting, there is little conviction in the upside. As a result, the gold rate may be supported or under pressure as markets strongly anticipate that rate cuts may resume by September. It will depend on how strongly the Fed confirms these expectations.
Will Support Zones Protect Against Deeper Pullback?
Technically, gold (XAU/USD) remains in a short-term uptrend, supported by an ascending channel on the daily chart. Additionally, the indicators favor buyers on dips, particularly in the $3,340–$3,335 support zone. A decline below this mark might make the bullish sentiment erroneous and draw in gold rate sellers.
If gold can overcome the current resistance level at $3,400, the upside potential is still very strong. A persistent move above $3,434–$3,435 might allow for a retest of the all-time high from April, which is close to $3,500. Additionally, that level coincides with the channel’s upper edge. Nonetheless, the perspective after the FOMC meeting and the continued geopolitical tensions will be key to this decision.
Will the FOMC Meeting Shift Market Momentum?
Markets will closely monitor Powell’s press conference and the Fed’s statement. Additionally, investors want to know if the Fed will ease as a result of recent weak inflation data and worldwide unrest. Although there is little chance of a rate cut this week, a dovish hint might encourage fresh gold purchases.
Until then, the traders might be able to stick to a wait-and-see attitude. While monetary policy and world events are developing, the safe-haven demand would then be pivotal in shaping the next trend. Hence, it is still widely assumed that the FOMC meeting will either be consistent with or opposite to the prevailing trends in gold rates.
Final Words
The gold market continues to be cautiously balanced. Although technical indicators encourage dip buying, significant gains are contingent upon Fed cues and outside events. In the coming days, the gold rate might continue to react more as geopolitical tensions and market anxiety increase.
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