Gold News: Will Powell’s Dot Plot Spark a New Gold Breakout or Confirm Market Exhaustion?

Gold Prices Forecast: Gold Pulls Back From Record High as Fed Decision Looms

Gold prices are trading lower on Wednesday, retracing from Tuesday’s record high of $3,703.24 as traders book profits and brace for the U.S. Federal Reserve’s interest rate decision at 18:00 GMT. Spot gold is currently quoted at $3,668.43, holding above near-term support at $3,658.03.

At 10:30 GMT, XAU/USD is trading $3666.43, down $23.42 or -0.63%.

Fed Rate Cut Expected – Will Powell Signal More Easing Ahead?

Market participants are pricing in a 100% chance of a 25 basis point rate cut, according to the CME FedWatch Tool. However, attention will center on Fed Chair Jerome Powell’s comments and the “dot plot” in the Summary of Economic Projections. The market is looking for confirmation that the Fed will maintain a dovish bias as labor market data softens and inflation stays elevated above the 2% target.

Paul McCulley, former Pimco executive, noted that a half-point cut would send a concerning message about the labor market’s condition, something Powell is likely to avoid at this stage. While expectations point to three dissenting votes, the overall tone is anticipated to support lower rates—a net positive for gold, which benefits from reduced opportunity costs in a low-rate environment.

Dollar Regains Ground, RSI Pullback Suggests Gold Cooling

The U.S. dollar index edged up 0.2% on Wednesday after sinking to a two-month low on Tuesday. This slight rebound in the dollar, alongside a gold RSI reading of 75 (down from 81), indicates short-term overbought conditions and profit-taking by traders.

Rhona O’Connell of StoneX noted that gold has repeatedly pulled back around the $3,700 level, possibly due to option writers defending that resistance zone. A move above $3,703.24 would invalidate this pattern and signal a fresh wave of bullish interest, potentially targeting $3,879.64.

Treasury Yields Steady But Pressured by Dovish Outlook

U.S. Treasury yields remain subdued, with the 10-year yield hovering around 4.015% and the 2-year at 3.501%. These levels reflect the market’s dovish tilt ahead of the Fed’s announcement. Investors are positioning for continued easing in light of weak labor data, moderate consumer strength, and external pressures from tariffs.

ETF Inflows and Forecast Upgrades Support Long-Term Bull Case

SPDR Gold Trust, the largest gold-backed ETF, reported a 0.32% increase in holdings on Tuesday, rising to 979.95 metric tons. Deutsche Bank also raised its long-term gold price forecast to an average of $4,000, citing sustained demand and favorable monetary policy conditions.

Gold Prices Projection: Bullish Setup Holds with Key Resistance in Focus

Gold remains in a bullish setup despite the current pullback. If prices hold above $3,658.03 and regain momentum above $3,703.24, traders could aim for $3,879.64 in the near term. However, a break below $3,607.49 could trigger a sharper decline, with support near $3,612.83 offering a buffer. All eyes are now on Powell—his tone will likely define gold’s next move.

More Information in our Economic Calendar.