XAU/USD Bounces from Three-Week Low Ahead of Fed Announcement

Summary:

Gold (XAU/USD) recovers above $4,000 as traders weigh the Fed’s upcoming rate decision, snapping a three-day losing streak amid cautious safe-haven buying.

BUY XAUUSD

Close Time

CLOSED

4014.89

Entry Price

4120.00

3950.00

4177.15 +19.32 +0.46%

648.9

Pips

Loss

3950.00

3949.98

Exit Price

4014.89

Entry Price

4120.00

Gold prices staged a modest recovery on Wednesday, reclaiming the key $4,000 psychological level after briefly touching a three-week low near $3,886 on Tuesday. At the time of writing, XAU/USD is trading around $4,020, marking a gain of over 1.5% as investors rotated back into safe-haven assets, seeking protection against lingering macroeconomic uncertainties. This rebound ends a three-day losing streak, following a sharp retreat from last week’s historic high of $4,381—a decline of nearly 10% in just a few sessions.

The metal’s recent weakness had been largely driven by a prevailing risk-on sentiment in global markets, underpinned by optimism over US-China trade developments. Reports of progress in negotiations temporarily boosted investor confidence in equities and commodities linked to growth, reducing demand for gold as a hedge. The pullback saw gold finding interim support around the $3,900 mark, where buyers stepped in ahead of key US monetary policy events.

Attention has now shifted to the US Federal Reserve’s interest rate decision, scheduled for 18:00 GMT. Markets are pricing in the likelihood of a second consecutive 25-basis-point (bps) cut, which would bring the target range to 3.75%-4.00%, following September’s initial “risk-management” rate cut aimed at cushioning the economy from labor market pressures. While the rate cut itself is widely anticipated, traders are closely monitoring the accompanying statement and Chair Jerome Powell’s press conference for hints regarding the trajectory of future monetary policy. Any indication of a prolonged easing cycle could provide further support for gold, potentially extending the current rebound, while a cautious tone or signals of a pause could limit upside momentum.

Technical Analysis

From a technical perspective, gold’s recent intraday surge has been supported by early bullish signals in relative strength indicators, suggesting a corrective reversal against the short-term bearish trend. The metal appears poised to challenge the next key resistance level at $4,120. However, the persistence of negative pressure from trading below the 50-day exponential moving average (EMA50) continues to weigh on the potential for a sustained recovery in the near term. Traders are therefore likely to watch intraday price action closely, balancing optimism for a rebound with caution over lingering technical headwinds.

Market commentators note that gold’s rebound is also underpinned by geopolitical concerns and broader macroeconomic uncertainty, which traditionally bolster the metal’s appeal. While the US equity market remains relatively resilient, the looming Fed decision injects a layer of volatility that could drive further short-term gains in precious metals. In the coming sessions, the interaction between monetary policy signals and risk sentiment will likely define gold’s trajectory, with analysts emphasizing that a decisive break above $4,050 could pave the way for a retest of the recent highs. Conversely, any failure to sustain above $4,000 may invite renewed selling pressure.

TRADE RECOMMENDATION

BUY GOLD

ENTRY PRICE: 4015

STOP LOSS: 3950

TAKE PROFIT: 4120

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