Gold Price Forecast: XAU/USD holds comfortably above $1,800 ahead of Fed

• Gold price fluctuates in a tight range above $1,800 on Wednesday.
• The 10-year US T-bond yield holds steady slightly below 3.5%.
• The US Dollar struggles to find demand ahead of the Fed's policy announcements.

Following Tuesday's impressive rally, Gold price moves up and down in a tight range above $1,800. As of writing, XAU/USD was virtually unchanged on the day at $1,809.

Eyes on Fed after US CPI data

The softer-than-expected inflation data from the US triggered a sharp decline in the benchmark 10-year US Treasury bond yield and forced the US Dollar to suffer heavy losses against its major rivals on Tuesday.

As the focus shifts to the Federal Reserve's policy announcement, the 10-year US T-bond yield stays relatively quiet slightly below 3.5%, not allowing XAU/USD to gather bullish momentum.

The Fed is widely expected to raise its policy rate by 50 basis points to the range of 4.25-4.5% following its December policy meeting. Hence, investors will pay close attention to the revised Summary of Economic Projections (SEP), the so-called dot plot, and FOMC Chairman Jerome Powell's comments on the policy outlook in the press conference.

Federal Reserve Preview: How Powell may drain the Dollar of any dot-related gains.

In September's dot plot, the median terminal rate projection stood at 4.6% and policymakers didn't pencil down a rate cut for 2023. With the 'Fed pivot' narrative gaining traction after the November Consumer Price Index data, market participants will scrutinize the SEP to confirm or deny a pivot in the Fed's policy outlook.

US Inflation Quick Analysis: Dollar's fightback is futile, last hurrah in play.

Technical levels to watch for