Gold (XAUUSD) Price Forecast: Bearish Reversal Looms as Traders Eye Fed Guidance

Gold Prices Pull Back as Traders Eye Fed Decision and Middle East Ceasefire Signals

Gold fell over 1% on Monday as traders locked in profits following an eight-week high, with attention turning to the Federal Reserve’s policy decision and diplomatic overtures out of Iran. The move put the yellow metal in position to form a potentially bearish closing price reversal, hinting at further consolidation unless fresh safe-haven demand emerges.

At 15:30 GMT, XAU/USD is trading $3403.36, down $29.47 or -0.86%.

Israel-Iran Tensions Ease but Haven Demand Stalls

Geopolitical risk from the ongoing Israel-Iran conflict has been one of the key drivers of gold’s recent rally. However, markets appear less reactive as Iran signals willingness to resume nuclear talks through Arab intermediaries.

These developments softened crude prices, which dropped over 3%, and helped calm inflationary fears. That, in turn, limited further upside in gold despite persistent Middle East tensions. U.S. Treasury yields remained nearly flat on the day, reflecting reduced urgency for traditional haven assets.

Dollar Weakness Fails to Support Gold Rally

The U.S. Dollar Index (DXY) slipped to 97.685, just above last week’s multi-year low. Bearish sentiment is holding, with fresh short positions likely to cap any bounce.

Despite the dollar’s weakness, gold failed to capitalize, suggesting broader indecision across markets. According to analysts, the lack of safe-haven flow into the dollar and Treasuries highlights traders’ focus on upcoming central bank guidance over geopolitical drivers.

Fed Outlook to Steer Near-Term Price Action

Traders now await Wednesday’s Federal Reserve decision, with expectations pointing toward an unchanged rate. However, forward guidance will be key.

Should Chair Powell lean hawkish or signal a prolonged hold, gold could face renewed pressure. Any hint of policy normalization could firm the dollar and temper bullion’s appeal. Still, dovish undertones or concern over inflation’s durability could reinforce the metal’s support near technical pivot levels.

Gold Prices Forecast: Bullish Bias Holds if $3310 Zone Holds

Technically, gold is testing key support areas. A dip toward $3348.54 could invite fresh buying. A failure at that level would expose deeper support at $3310.48 and the 50-day moving average at $3293.10.

On the upside, resistance sits near $3451.53, with the all-time high at $3500.20 still in play should bullish momentum resume.

For now, the forecast holds a cautiously bullish tone—provided $3310 support remains intact and the Fed avoids a hawkish pivot.

More Information in our Economic Calendar.