Gold Outlook: $4,250 Resistance Tests Ahead Of Volatile FOMC Week

This week, market attention turns to the Fed's final rate decision of the year. Updates to the dot plot, adjustments to economic projections, and Powell's remarks could all be key factors influencing gold's year-end trajectory.

Technical Observation: Consolidation Near Highs, $4,250 Resistance Stands Out

Looking at the XAUUSD daily chart, gold has been trading in a tight range between $4,180 and $4,250. Bulls face clear resistance near $4,250, with multiple attempts failing to hold above this level. Although the uptrend formed at the end of October remains intact, buying momentum has been limited, keeping supply and demand relatively balanced.

On Monday morning, gold traded near $4,200. To the upside, $4,250 is a critical level for resuming the uptrend. A sustained break above this level, accompanied by higher volume, could reignite bullish momentum, pushing toward $4,300 and ultimately the record high of $4,381.

To the downside, a drop below last week's $4,180 low would shift focus to the October uptrend line near the 50-day moving average, likely attracting buying interest and prompting a short-term rebound.

FOMC Decision in Focus: Gold Awaits Guidance

Bullish factors remain dominant for gold. In the U.S., the December rate cut is priced at nearly 90%, the dollar is weak, and internal Fed divisions over the path of future easing have grown, all supporting gold. Meanwhile, China's central bank increased its gold holdings for the 13th consecutive month in November, reinforcing price support. Yet, last week's economic data only reinforced existing bullish narratives without providing new momentum.

At the same time, U.S. Treasuries faced continued selling, with yields rising, reflecting cautious expectations for a "hawkish cut," which adds some pressure to the non-yielding asset.

The market's focus is squarely on the Fed's decision this week. Beyond the rate cut itself, traders are watching dot plot updates, Powell's tone, and guidance on the 2026 rate cut path. Unlike Powell's previous emphasis on internal consensus, committee members now differ significantly in both policy direction and magnitude. Even minor adjustments by a few members could lead to notable dot plot shifts and rate path changes.

The baseline scenario for traders is that the U.S. labor market faces downside risks, unemployment forecasts may be slightly revised higher, and Powell may acknowledge internal Fed divisions while using moderately hawkish language on the rate cut. With dot plot uncertainty intact, this policy risk hedging could provide some support to gold.

If the Fed's outcome and comments are clearly dovish, gold's upside momentum could strengthen further. Conversely, if economic forecasts show persistent inflation and some Fed members lean hawkish, delaying 2026 rate cuts, profit-taking could intensify, putting short-term pressure on gold prices.

Beyond the Fed: Other Key Events This Week

Overall, gold remains in high-level consolidation, and market confidence in its long-term bullish outlook stays firm. In the short term, "range trading and trend-following" remains the preferred strategy. Until $4,250 is decisively breached, chasing positions carries risk. Any reasonable pullback is likely to attract buying interest and support prices.

Aside from the Fed, the market will also monitor policy meetings from the RBA, Bank of Canada, and Swiss National Bank. The market's main tension has shifted from simply validating economic data to pre-pricing potential divergences in major central bank policies. Greater volatility in interest rates and currencies could further enhance gold's appeal as a safe-haven asset.

On Tuesday, the U.S. will release October JOLTS job openings, expected at 7.15 million. This will be the first data reflecting the true labor market post-government shutdown, potentially shaping expectations for Fed policy.

If the figure falls below consensus, it may reinforce expectations of a weaker labor market, increase the probability of rate cuts, and provide additional support for gold.

Source: Pepperstone