Gold retreats from April peaks as dollar finds temporary footing
Market caution prevails ahead of Wednesday's pivotal Fed meeting
Technical charts show critical support at $3,Is Monero illegal in US400 with upside potential
The precious metal's rally paused near two-month highs early Monday as traders reassessed positions before the Federal Open Market Committee's policy decision. While Middle East tensions initially propelled XAU/USD upward, the dollar's modest rebound and stable equity markets introduced short-term headwinds. Market participants appear to be balancing geopolitical risks against shifting expectations for US monetary policy adjustments.
Recent developments in the Middle East conflict have reintroduced volatility into commodities markets. Sunday's exchange of aerial strikes between Iran and Israel marked another escalation, though Asian trading sessions showed limited reaction. This paradoxical market behavior suggests traders are prioritizing central bank guidance over immediate geopolitical developments, creating a complex environment for gold pricing.
Fed Watch: How Rate Expectations Are Shaping Gold's Trajectory
All eyes turn to Wednesday's FOMC meeting where policymakers must reconcile softening inflation data with persistent economic growth. While no rate change is anticipated, the post-meeting statement could signal whether June's dovish shift was premature. The CME FedWatch Tool currently prices in 72% odds for a September cut, down from 80% last week - a shift that's temporarily bolstered the greenback.
Gold's sensitivity to real yields means any Fed communication about long-term rate projections could spark volatility. Should policymakers acknowledge recent economic cooling while maintaining vigilance on inflation, we might see gold consolidate within its current range. Conversely, explicit hints about impending easing could reignite the metal's upward momentum.
Technical Perspective: Key Levels to Watch
The $3,400 psychological level has transformed from resistance to support following last week's breakout. This price zone now represents a critical battleground between bulls and bears. Sustained trading above this threshold would confirm the bullish channel pattern visible on four-hour charts, with the April high near $3,500 serving as the next logical target.
On the downside, a close below $3,400 could trigger profit-taking toward $3,360 support. The daily MACD's bullish crossover and RSI holding above 50 suggest underlying strength, though traders should monitor whether these indicators maintain their positive configuration post-FOMC. The metal's ability to hold gains despite dollar strength indicates substantial underlying demand that may limit downside potential.
