Gold (XAUUSD) Forecast: Fed Decision Could Trigger the Next Major Move

Gold (XAUUSD) prices enter a crucial week as investors weigh up the effect of mounting geopolitical tensions against expectations for the upcoming Federal Reserve meeting. The gold price dropped last week and closed near the $5,000 mark after a strong rally earlier in the year. A stronger US dollar restricted demand and triggered heavy selling. The market is now waiting for signals from Federal Reserve Chair Jerome Powell, which can determine the next move for gold

Geopolitical Tensions and Rising Oil Prices Complicate Gold Outlook

Gold prices dropped 2.92% last week despite the tensions between the United States, Israel and Iran. Normally, increasing geopolitical risks are good for safe-haven assets. However, investors shifted capital into the U.S. dollar, which put pressure on gold.

According to some reports, Washington may form a multinational naval coalition to escort ships through the Strait of Hormuz. This points to the risk of disruptions to the global energy supply.

Energy markets have put pressure on the economic outlook. WTI crude oil has reached $100 per barrel which increases the fears of an escalating inflation problem. Higher energy costs raise transportation and production costs across global economy. At the same time, the latest U.S. labor data showed signs of weakness. The economy lost about 92,000 jobs in February and the unemployment rate stood at 4.4%,

On the other hand, the higher energy prices will push inflation higher in the next few months.

Federal Reserve Meeting Could Decide Gold’s Next Direction

The Federal Open Market Committee meeting of March 18 is now the most important event for gold markets. This meeting will be one of the last policy decisions to be chaired by Jerome Powell before his term ends in May. Investors will pay close attention to the updated Fed dot plot, which outlines expectations of policymakers for future interest rates.

If Powell calls risks of high oil prices and persistent inflation, markets may expect interest rates to remain higher for longer. This result could strengthen U.S. dollar and raise real yields which would likely exert pressure on gold prices.

However, Powell may also pay attention to the weakening labor market and slowing economic growth. If he indicates that the Fed still intends to cut interest rates later in 2026, then gold could gain bullish momentum.

Gold Technical Outlook Builds Risk of Further Correction

The daily chart for spot gold shows that the price is showing weakness in the short term and consolidating above the 50-day SMA. Last week’s price action indicates that prices may continue to correct lower until the gold market recovers above the $5,200 region.

A break below $5,000 will take the gold price to $4,800. On the other hand, a break below $4,800 will break the ascending broadening structure and will introduce a deeper correction to $4,400. A break above $5,200 is required to negate the bearish price action and take prices higher.

Bottom Line

Gold is at important crossroads as geopolitical tensions, escalating oil prices and expectations of monetary policy collide. The Federal Reserve meeting will likely determine what happens next to the metal. Strong ETF inflows and persistent institutional demand still support gold in the long term. However, short term direction will be function of whether the Fed signals tighter policy or prepares markets for future rate cuts.

From technical perspective, the gold price shows weakness during the last week. The price is consolidating around the $5,000 level. A break below $5,000 will take the prices to $4,800. However, a break below $4,800 will indicate further downside towards $4,400.

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