Gold caught in range trade ahead of Fed interest rate decision

• Gold stabilizes on Wednesday after a near 1% recovery the previous day. 
• All eyes are on the Federal Reserve interest rate decision later in the day. 
• Gold is better positioned to eke out a fresh all-time high still. 

Gold’s price (XAU/USD) trades roughly flat and stabilizes around $2,760 at the time of writing on Wednesday after a whipsaw start to the week. No big moves are expected, as several traders sit on their hands until the Federal Reserve (Fed) interest rate decision later in the day. Lower US rates are often seen as beneficial for Gold to trade higher. 

Market expectations show the Fed will likely keep interest rates unchanged in the range of 4.25%-4.50%, so traders will rather focus on Fed Chairman Jerome Powell’s comments on the central bank’s policy outlook. And here, traders might be in for a huge disappointment. Powell is not expected to comment on President Donald Trump's criticism of the Fed or why or how Trump calls for lower rates. Instead, Powell is expected to repeat that the central bank remains independent and data-dependent and will focus on its dual mandate: inflation and the jobs market. 

Daily digest market movers: Ready for a fresh all-time high

• According to Bloomberg, the market expectation is for Fed Chairman Jerome Powell to deliver a dovish pause. This should see US yields tilt lower, which opens the opportunity for Gold to surge higher and print a possible fresh all-time high. 
• Australian hedge funds are clamouring for Gold exposure during the second term of US President Donald Trump. They are betting that his administration will fail to arrest the US economy’s spiralling debt and that Gold will act as an antidote to the bond market’s carnage, Financial Review reports.
• At 19:00 GMT, the Fed will deliver its monetary policy decision, followed by a press conference from Fed Chairman Jerome Powell at 19:30 GMT.

Technical Analysis: Softening stance sets up Gold for all-time high

Gold’s price has positioned itself at a perfect point for reaching a fresh all-time high should the Fed be rather dovish on Wednesday. The decline earlier this week has nearly recovered, and Gold is trading roughly flat for now. Expect volatility to pick up, with a possible fresh all-time high on the back of comments from Fed Chairman Jerome Powell, who is expected to deliver a dovish rate pause.

The first line of support remains at $2,721, a sort of double top in November and December broken on January 21. Just below that, $2,709 (October 23, 2024, low) is in focus as a second nearby support. In case both abovementioned levels snap, look for a dive back to $2,680 with a full-swing sell-off. 

Although the window of opportunity is starting to close, Gold could still hit the all-time high of $2,790, which is around 1% away from current levels. Once above that, a fresh all-time high will present itself. Meanwhile, some analysts and strategists have penciled in calls for $3,000, but $2,800 looks to be a good starting point as the next resistance on the upside. 

XAU/USD: Daily Chart