Gold price may dip with Fed rate hike
Markets increasingly anticipate the Federal Reserve will hike US interest rates by 0.25% this week, potentially pressuring the global gold price to slide by as much as US$100 an ounce, say pundits.
Gold (XAU/USD) experienced a brief uptick near $4,275 during Wednesday's Asian trading session, though future upside appears limited. Meanwhile, the US Dollar (USD) experienced a brief pause after reaching a two-week peak, providing support for the precious metal. However, traders may be hesitant to make significant directional bets ahead of the Federal Reserve's major decision.
The Federal Reserve (Fed) is expected to announce a 25 basis points (bps) interest rate increase at the close of its September 15–16 meeting. Focus will be on the Fed's updated economic projections, including the so-called dot plot, and the comments from Fed Chair Kevin Warsh during the post-meeting press conference. The outlook will play a crucial role in influencing USD price dynamics and providing a fresh directional push to gold.
Recent factors, such as oil-driven inflation risks and a surge in borrowing, have fueled concerns about further tightening by the Fed. In addition, rising Middle East tensions have bolstered the safe-haven USD, potentially capping gold prices. Saudi Arabia has issued security alerts following a series of attacks by Iran-aligned Houthis in Yemen, signaling a potential escalation of the regional conflict.
The US Central Command has also redirected 103 commercial vessels as part of its blockade on Iranian maritime trade through the Strait of Hormuz, which supports oil prices and benefits USD bulls.
Gold has been showing resilience below the 50-day Simple Moving Average (SMA) and is currently trading above the 50% retracement level of the July-August upswing. Momentum oscillators have cooled off, with the MACD in negative territory and the Relative Strength Index (RSI) hovering near 50. This suggests that the upside momentum is moderating, even as gold remains above a key moving average.
Traders should be cautious of potential resistance at the 38.2% Fibonacci retracement near $4,413, followed by a stronger hurdle at the 23.6% retracement around $4,520.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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