Gold Daily Forecast As per the latest update, gold retreated by 0.50% on Wednesday amid rising tensions between the United States and Iran. Market participants are now waiting for the upcoming monetary policy announcement by the Federal Reserve at 18:00 GMT. Currently, the XAU/USD pair is trading at $4,039 levels. Moreover, the risk-on sentiment in US stock indices has reduced today. On top of that, the ten-year US Treasury yield advanced by three basis points to 5.040%. Meanwhile, oil prices are supported by ongoing tensions within the Middle East region. In this situation, dollar-denominated assets like gold are under pressure. The greenback is cooling off in anticipation of the Fed meeting. At the moment, the US dollar index (DXY), which gauges the greenback's performance versus six different currencies, declined by 0.09% to print 102.27. In this case, the focus should be on the Federal Reserve announcement. Markets have priced in a near certainty that the fed funds rate will stay at 3.75%-4%. Still, questions may come out at the Wash press conference as to why the central bank decided not to hike rates in light of WTI, the US oil benchmark at just under $103 per barrel (+3%). Moreover, the cost of gas is now $1.20 higher compared to last year ($4.24), reported AAA Fuel prices. Moreover, in the previous SEP, the vast majority of the FOMC members pencilled in at least one additional hike during this calendar year. Thus, besides the current policy update, market participants will pay attention to any comments made by Warsh related to the future path of interest rates despite his reluctance to provide any forward guidance. It is worth mentioning that tensions are still high amid an attack carried out by Houthis against the kingdom of Saudi Arabia. As expected, oil prices reacted positively to geopolitical developments in the Middle East. Post-FOMC announcement, gold traders will turn their focus towards Thursday's release of the Core PCE Price Index, the Fed's favourite gauge of inflation. High readings in tandem with robust GDP numbers will strengthen the likelihood of yet another Fed rate hike at its next December policy session. The swaps market priced in a 21 bps tightening, which translates to an 85 per cent probability of the Fed hiking in its next December meeting. However, higher interest rates are negative for gold prices. It is important to highlight that analysts quizzed by Reuters slashed their forecasts for gold to lower levels by the end of 2026. According to the daily chart, yellow metal made a bullish harami candle formation on Monday; Wednesday's price action casts doubts regarding the accuracy of such a technical formation. In fact, should gold close near its existing price on Wednesday, it means that we might see some consolidation. Currently, momentum is negative because the Relative Strength Index (RSI) shows a bearish indication pointing downward alongside price action. Considering both elements, we expect price action to stay around similar areas ahead of tomorrow's Fed announcement. Above the $4,000 level, there is a resistance trendline connecting September highs. Above $4,100, resistance is another level where bulls can drive price higher toward the $4,200 level. Further resistance is located at the 100-day Simple Moving Average (SMA) at $4,218 and the 50-day SMA at $4,278. However, should gold fall below the psychological $4,000 barrier, it will retest last Friday's low of $3,975. Further, the next important support areas would be the July 17 low of $3,959 and the YTD low at $3,941.
