Gold edges up ahead of the Fed’s key policy meeting

Gold prices inched higher on Tuesday, at one point returning to the 4,220 USD/ounce area, as the market stayed defensive ahead of the U.S. Federal Reserve’s interest rate decision. This is seen as one of the most important meetings of the fourth quarter, potentially shaping market risk appetite for the remainder of the year.

Despite facing corrective pressure since early December, the precious metal is still on track for a four-month winning streak, strongly supported by expectations that the Fed will enter a rate-cutting cycle.

Rate-cut expectations continue to support market sentiment

The Fed is almost certain to cut rates by 25 basis points at the end of its two-day meeting on Wednesday – with odds as high as 87.4%, according to market pricing.

These expectations strengthened after data late last week showed the September PCE index cooling, a sign that inflationary pressures are gradually easing.

However, a considerable number of analysts believe the Fed may choose a “soft hawkish” stance (hawkish hold) due to the lack of key data for October–November. This makes gold price forecasts more uncertain.

Bob Haberkorn of RJO Futures commented:

“Gold’s current upside momentum is heavily reliant on expectations of another 0.25% Fed rate cut and the strong rally in silver.”

Technical analysis: Gold stuck in a key sideways range

Since the beginning of December, gold has been moving sideways within the 4,165–4,175 support zone and the 4,245–4,265 resistance zone. This range-bound action creates ambiguity around the trend, keeping both bullish and bearish wave scenarios on the table.

Scenario 1: Gold enters a new bullish cycle

In the bullish scenario, the white L2 point has been completed, and gold is forming a 5-wave micro-structure (t1 – l1 – t2 – l2 – t3 in white) – the “million-dollar pattern No. 1.”

• The white l2 point was likely completed at 4,170 on 11/12.

• Gold may be entering the t3 impulse wave, preparing to retest the strong resistance zone.

• Short-term target: 4,245 – 4,265.

• Longer-term target: a return to the all-time high area at 4,360 – 4,380.

If the Fed sends a “dovish” signal, this scenario is more likely to be triggered.

Scenario 2: Gold remains in a corrective wave

The corrective scenario remains unchanged from the latest forecast.

• Gold is still moving within the (a) – (b) – (c) white structure.

• Wave (b) has most likely completed at 4,264.39 USD.

• Gold is now entering the decline from (b) down to (c).

If selling pressure persists:

• First target: 4,130 – 4,140

• Deeper target: 4,030 – 4,050

This scenario will gain strength if the Fed delivers a “hawkish” signal or appears more cautious than the market expects.

Gold is at a crossroads – the Fed will be the catalyst that breaks the range

The gold market is going through a sensitive phase, where both buyers and sellers have valid reasons to stay defensive. The prolonged tug-of-war since early December clearly reflects the market’s “wait-and-see” mindset ahead of the FOMC meeting’s “moment of truth.”

• Medium- and long-term investors: Gold still retains its appeal as a safe-haven asset, especially in a context where U.S. interest rates are likely to enter a cutting cycle and geopolitical risks remain latent.

• Short-term traders: Strict risk management is essential. This is a period where volatility can be both sudden and sharp, so you should only act when there are clear signals.

The Fed meeting on Wednesday night is almost certain to break the current sideways range, paving the way for a new price cycle. Once the trend is confirmed, we will have a much clearer basis for choosing the appropriate scenario.

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