Gold (XAUUSD) Price Forecast: Fed Decision and Middle East Tensions Keep Bulls Engaged

Will the Federal Reserve Trigger a Gold Breakout Above $3,500?

Spot gold remains steady on Wednesday ahead of the Federal Reserve’s policy decision at 18:00 GMT, trading near immediate resistance at $3,451.53. A bullish Fed tone could trigger an acceleration toward the all-time high at $3,500.20. On the downside, key support lies in the $3,308.90–$3,310.48 zone, anchored by the 50-day moving average and a pivotal level. A breakdown below this area could sour sentiment and spark a short-term correction.

At 12:31 GMT, XAU/USD is trading $3386.21, down $2.24 or -0.07%.

Middle East Conflict Fuels Safe-Haven Demand

The intensifying military exchange between Israel and Iran has become a primary driver of safe-haven flows into gold. Israel struck 40 targets in Iran on Wednesday, including nuclear and weapons sites, while Iran launched a drone assault in response.

With oil prices surging 11% and gold gaining over 1% in early trade, the market is reacting sharply to fears of regional escalation and potential disruption in the Strait of Hormuz. These geopolitical risks are creating a durable bid under gold as investors hedge against further instability.

Federal Reserve Projections in Focus for Gold Traders

Markets are also bracing for the Fed’s updated Summary of Economic Projections. While rates remain at 4.25%–4.50%, any indication of prolonged policy tightness could pressure equities and boost gold as a defensive play.

Despite the rate environment, gold’s ability to hold near-record levels suggests investors are more focused on inflation stickiness and long-term policy uncertainty. A dovish tone from the Fed could propel gold past resistance, while hawkish signals may limit upside but are unlikely to trigger a major reversal given broader structural support.

Central Bank Demand Anchors Long-Term Gold Prices

A key structural driver underpinning gold is persistent central bank demand. J.P. Morgan Research forecasts 900 tonnes of gold purchases by central banks in 2025, following record accumulation in recent years.

This trend reflects a global diversification away from the U.S. dollar and rising concerns about financial system weaponization. With central banks acting as steady buyers, institutional support for gold remains strong and helps establish a long-term floor under prices.

ETF Flows and Institutional Forecasts Signal More Room to Run

Despite gold’s elevated price, global ETF holdings remain below previous peaks, leaving room for renewed investment flows. Goldman Sachs recently upgraded its year-end target to $3,700, with upside to $4,500 in extreme scenarios.

J.P. Morgan sees Q4 prices averaging $3,675, rising toward $4,000 into mid-2026. These forecasts reflect conviction that the combination of geopolitical risk, policy uncertainty, and central bank accumulation will continue to support higher gold prices.

Gold Prices Forecast: Bullish Bias Persists Above Key Support

Gold’s ability to consolidate near resistance levels, despite rising real yields and a firm U.S. dollar, underscores deep structural support. With geopolitical tensions intensifying, a potential dovish shift from the Fed, and firm central bank demand, the medium-term outlook remains bullish.

A break above $3,451.53 could open the path to $3,500.20 and beyond, while holding above $3,308 keeps the bullish case intact. Traders should remain alert for volatility around the Fed release, but the broader trend favors strength.

More Information in our Economic Calendar.