Gold Recovers From Two-Week Lows But Bulls Face a Minefield Ahead of FOMC Minutes

Traders' Opinions

Summary:

XAU/USD recovers modestly from two-week lows, though a confluence of geopolitical easing and a resilient dollar keeps the upside capped ahead of a pivotal week of US data

BUY XAUUSD

EXP

TRADING

4930.39

Entry Price

5100.00

4850.00

4954.21 +76.32 +1.56%

0.0

Pips

Flat

4850.00

Exit Price

4930.39

Entry Price

5100.00

Gold prices are clinging to modest intraday gains during early European trading on Wednesday, staging a measured recovery after suffering one of its more punishing single-session declines in recent memory. The yellow metal shed more than 2% on Tuesday, briefly dragging prices down to the $4,843–$4,842 region — a level not seen in nearly two weeks — before buyers stepped back in to defend the broader trend. The bounce is encouraging on the surface, but seasoned traders would be wise not to read too much into it just yet. The fundamental landscape remains complex, and with the Federal Open Market Committee (FOMC) Minutes due later today, the market is in no mood to commit aggressively in either direction.

From where I sit, Gold's near-term trajectory is being pulled in two very distinct directions, and the tension between those forces is what makes this such a fascinating and, frankly, treacherous market to navigate right now.

The case for Gold bulls draws its energy from a Federal Reserve that is, by most measures, edging closer to an easing cycle. Chicago Fed President Austan Goolsbee added fuel to that narrative on Tuesday, reaffirming his view that several more interest rate cuts could be on the table this year — but only if inflation continues its descent back toward the 2% target. His comments did not land in a vacuum. They came hot on the heels of softer-than-expected US consumer inflation data released last Friday, which meaningfully reinforced market expectations that the Fed will pull the trigger on its first rate cut in June, with two additional reductions pencilled in before the year is out.

For Gold, this is textbook tailwind territory. Lower interest rates reduce the opportunity cost of holding a non-yielding asset like bullion, and when the world's most powerful central bank signals a willingness to ease, money tends to find its way into the precious metals complex. The repricing of Fed rate expectations has been a dominant driver of Gold's remarkable rally over the past several months, and Wednesday's FOMC Minutes could either reinforce that narrative or — crucially — complicate it.

That is the risk. Markets have already front-loaded a great deal of dovish expectation. If the Minutes reveal a Fed that is more divided, more data-dependent, or more cautious than the market currently assumes, we could see a swift and sharp reassessment. Gold, trading at elevated levels by any historical standard, would be particularly vulnerable to such a repricing.

Compounding the picture is a US Dollar that, despite the dovish Fed narrative, is refusing to roll over. The greenback is holding a mild positive bias on Wednesday, and for Gold — priced in dollars — that creates a natural drag on upside momentum. A stronger dollar makes Gold more expensive for international buyers, effectively dampening demand at the margin.

Then there is the geopolitical dimension, which has historically been one of Gold's most reliable engines of demand. Safe-haven flows have been a meaningful contributor to the metal's ascent in recent months, but that particular tailwind appears to be easing — at least for now. Diplomatic developments on two of the world's most watched flashpoints are injecting a degree of cautious optimism into markets that Gold traders cannot afford to ignore.

Talks between the United States and Iran have resumed, and both sides are reported to have reached a preliminary understanding on the core guiding principles during their second round of nuclear negotiations in Geneva. The mere fact that dialogue is happening at all has meaningfully reduced near-term fears of a military confrontation, and with it, some of the risk premium that had been baked into Gold prices. Meanwhile, the trilateral discussions between the US, Russia, and Ukraine — aimed at advancing a framework for peace — have been pushed to Wednesday, keeping hopes of a ceasefire or broader resolution alive.

None of this means the world is suddenly a safer place. Geopolitical situations can reverse with startling speed, and any deterioration in either the Iran nuclear talks or the Ukraine peace process would almost certainly send safe-haven flows rushing back into Gold. But for now, the easing of acute tensions is a net negative for the metal, and it is one of the reasons I would urge caution against chasing this morning's recovery too aggressively.

Wednesday's FOMC Minutes are just the opening act in what promises to be a consequential stretch for markets. US housing data is also on the docket, providing a window into the health of one of the economy's most rate-sensitive sectors. Beyond that, traders are bracing for the release of Q4 2025 GDP figures, which will offer a definitive read on how the US economy performed heading into the new year. And looming largest of all is the Core Personal Consumption Expenditures (PCE) Price Index — the Federal Reserve's preferred inflation gauge — which will either validate or challenge the current market consensus around the pace and depth of rate cuts.

Each of these data points carries the potential to move Gold materially. A hotter-than-expected PCE print, for instance, would call into question the June rate-cut timeline and likely send the dollar higher and Gold lower. Conversely, a soft print would reinforce the dovish narrative and provide the fuel bulls are looking for to stage a more convincing recovery.

Technical Analysis

From a technical perspective, Gold (XAU/USD) finds itself at a pivotal juncture on the 4-hour chart. Price has undergone a sharp corrective decline from its late January peak near $5,580, but has since stabilised atop a rising trendline that originates from the mid-January lows, with the trendline now acting as dynamic support and price currently hovering around $4,917.94.

The $4,900–$4,920 area represents a meaningful confluence of the ascending trendline and a well-tested horizontal support band, making it a structurally important floor. So long as price holds above this region, the broader bullish bias remains intact. However, a decisive break and close below this confluence would represent a notable shift in market structure, likely opening the door toward the next horizontal support near $4,800. A failure to hold that level in turn would expose the $4,650–$4,700 area, where price previously found prolonged equilibrium.

To the upside, the immediate challenge for bulls is a clean reclaim of the $5,000 psychological level, which aligns with recent congestion and has repeatedly proven to be a contested zone. A sustained move above this barrier would shift attention toward the $5,100 resistance band, a level that has capped multiple rally attempts in recent weeks. A confirmed breakout above $5,100 would signal a resumption of the primary uptrend and bring the broader all-time high region back into play.

Price structure itself tells a constructive story — the trendline has held, higher lows remain in place, and the current consolidation near support is consistent with a potential base-building phase ahead of the next leg higher.

TRADE RECOMMENDATION

BUY GOLD

ENTRY PRICE: $4,930.00

STOP LOSS: $4,850.00

TAKE PROFIT: $5,100.00

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Gold Recovers From Two-Week Lows But Bulls Face a Minefield Ahead of FOMC Minutes

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