Gold climbs before Warsh’s Fed debut as hawkish tilt looms
Gold (XAU/USD) price rises 0.77% on Wednesday as traders await the Federal Reserve’s (Fed) monetary policy decision, the first one led by Kevin Warsh, in which the central bank is expected to keep rates steady amid the jump in inflation sparked by the Iran war. At the time of writing, the XAU/USD pair trades at $4,358 after bouncing off daily lows of $4,317.
XAU/USD rises as traders brace for Fed projections
The yellow metal advances amid growing speculation that the Fed could turn slightly hawkish in Warsh’s first meeting at the central bank. Last week, the US CPI and PPI prints were higher than expected, and a strong May Retail Sales report suggests that policy is not as tight as some Fed officials have expressed.
In addition to the Fed’s decision, officials will update their economic projections regarding GDP, inflation and the path of interest rates towards the end of 2026.
US Retail Sales for May rose 0.9% MoM, beating the 0.5% forecast, as per the US Census Bureau. Gas station sales were up 3.4% due to higher gasoline prices amid Iran tensions. The data shows consumer resilience, with 11 of 13 categories growing.
So far, Prime Terminal data shows that traders estimate a 20% probability that the Federal Reserve might increase interest rates by the end of 2026.
US Treasury yields remained steady ahead of the Fed’s decision. The US 10-year Treasury note yield is flat at 4.432%. The Greenback is posting modest gains of 0.01% according to the US Dollar Index (DXY). The DXY, which measures the buck’s value against a basket of six peers, is at 99.69.
Geopolitical noise has tempered since the US and Iran agreed on a Memorandum of Understanding (MOU) setting the stage for a 60-day truce, aimed at talking about Tehran’s nuclear program and that they are not allowed to acquire nuclear weapons. Earlier, US President Donald Trump said that the agreement is not final and that he could resume bombing if Iran does not behave.
XAU/USD technical outlook: Gold advances, but stalls near $4,400
Gold price remains in a sideways rotation, with investors waiting for Warsh’s first policy decision. Momentum remains mixed, as depicted by the Relative Strength Index (RSI). The RSI is aiming upwards, though in bearish territory, a reading that hints caution.
If XAU/USD clears the 200-day Simple Moving Average (SMA) decisively at $4,458, the next resistance would be the $4,500 milestone. Above this area sits the 50-day SMA at $4,571.
Downwards, Gold’s first support is the June 15 swing low of $4,262, ahead of the $4,200 psychological level. Below this area, the next area of interest would be the June 11 swing low of $4,023, ahead of the $4,000 mark.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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