Gold prices are easing from record highs above $3,700 as traders shift focus to the highly anticipated US Federal Reserve (Fed) decision later Wednesday.
Fed Rate Cut in Focus
Markets are fully pricing a 25 basis-point (bps) cut, but the spotlight will be on the Fed’s updated economic projections, the “dot plot,” and Chair Jerome Powell’s comments. Investors are eager to see whether policymakers will hint at more than two cuts this year.
Dovish Bets vs. Hawkish Risks
Recent weak US labor data combined with persistent inflation has intensified calls for aggressive easing, raising stagflation concerns. According to Refinitiv data, markets are pricing around 68 bps of cuts by year-end.
If the Fed signals three cuts, Gold could rally back to retest its record high at $3,703, with scope to push toward the $3,750 region. On the other hand, if the Fed sticks to a two-cut outlook or Powell strikes a less dovish tone, the US Dollar could rebound, triggering a deeper correction in Gold.
Technical Picture
Gold’s daily chart shows signs of buyer fatigue, with the 14-day Relative Strength Index (RSI) pulling back from 80 to 77, though still firmly in overbought territory.
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Upside levels to watch: $3,703 (record high), followed by $3,750.
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Downside supports: $3,627 (this week’s low), $3,600 (round figure), and $3,578 (last week’s low).
Overall, Gold remains set for heightened volatility as markets digest the Fed’s verdict and Powell’s words.
