Gold stays under pressure ahead of tomorrow's FOMC decision, with a rate hike already priced in and traders focused instead on the dot plot. A signal of three or more hikes through 2027 could trigger a hawkish selloff, while a forecast of just one more hike could give the metal a dovish boost. Elevated oil prices and Middle East tensions add to the bearish bias.
Rate hike priced in, dot plot in focus
Gold has traded under pressure to start the week as elevated oil prices and tomorrow's Federal Reserve decision keep traders defensive. Friday's higher-than-expected US monthly core inflation reading sealed the case for a September rate hike. The market now prices in a 92% chance of an increase tomorrow.
With the rate hike already priced in, traders are turning to the dot plot and the Fed's communication instead. Expectations point to one more hike signaled for the end of the year, with possibly another in 2027; very few expect three or more.
A signal of three or more hikes would likely be read as a hawkish surprise and trigger a gold selloff, while a forecast of just one more could be taken as dovish and lift the metal. The press conference itself is not expected to reveal much, given Warsh's preference for limited forward guidance.
Oil and the Middle East remain the other headwind
Markets are also watching developments in the Middle East, as oil prices continue trading above $100 and fuel inflation concerns amid worsening disruptions and supply fears. Oil has been the key driver of markets recently, so any de-escalation there could push oil lower and lead to a dovish repricing that would ultimately support gold.
The analyst notes that, for now, the fundamentals point to further downside for gold, and it would take a de-escalation in the Middle East or a dovish Fed to change that picture.
Support and resistance levels to watch
On the daily chart, gold has probed below the key $4,300 support, though bearish momentum hasn't picked up. Buyers want to see price climb back above that zone to open the door to a rally toward $4,890, while sellers will keep leaning on the support, with a defined risk above it, to push toward $3,885 next.
On the four-hour chart, a downward trendline defines the bearish structure: a pullback into it could draw in sellers targeting $3,885, while a break higher would strengthen the bullish case for $4,890. On the one-hour chart, gold consolidates between $4,250 and $4,320, with the next move hinging on which side breaks first.
Source: Investinglive
Trading involves risk.
Risk Disclaimer
