- Gold surges to a new all-time high of $3,045 on Wednesday.
- Geopolitical developments in Turkey and Ukraine drive the metal’s gains.
- The rally appears overextended, raising the possibility of a near-term pullback.
Gold price (XAU/USD) retreats slightly to around $3,030 on Wednesday after reaching a fresh all-time high of $3,045 earlier in the session. The rally was fueled by geopolitical tensions following the detention of Istanbul Mayor Ekrem Imamoglu, a key political rival of Turkish President Tayyip Erdogan, on charges of corruption and aiding a terrorist group.
Gold’s upside momentum also comes amid continued geopolitical uncertainty after a phone call between U.S. President Donald Trump and Russian President Vladimir Putin failed to yield a ceasefire agreement. While both leaders agreed to a 30-day pause in strikes on energy infrastructure in Ukraine, Ukrainian President Volodymyr Zelenskyy emphasized that negotiations without Ukraine’s involvement would not lead to meaningful results.
However, traders may exercise caution ahead of the Federal Open Market Committee (FOMC) policy decision on Wednesday. The Federal Reserve (Fed) is widely expected to keep interest rates steady at 4.25%-4.50%, but investors will closely analyze the updated Summary of Economic Projections and Fed Chair Jerome Powell’s post-meeting comments. Given the backdrop of Trump’s trade policies, markets will focus on how many rate cuts, if any, Fed policymakers anticipate for 2025 and beyond.
Daily Market Movers: Fed in Focus
- Despite optimistic comments from Trump and Putin, analysts remain skeptical about the significance of their agreement, describing it as a minor diplomatic success rather than a meaningful step toward peace. According to Bloomberg, the 30-day pause in attacks on energy targets was the only concrete outcome of their discussion.
- Meanwhile, the CME FedWatch Tool indicates a 99% probability that the Fed will keep rates unchanged on Wednesday, while the likelihood of a rate cut in June stands at 64.8%.
- Market expectations for further easing have been scaled back, which could weigh on gold prices as higher interest rates typically reduce the appeal of non-yielding assets like gold. Additionally, concerns over a potential U.S. economic slowdown, driven by Trump’s tariff policies, have led to significant selloffs in U.S. equities, with investors shifting their holdings at a record pace, according to Bank of America.
Technical Analysis: Gold Faces Key Resistance and Support Levels
Gold continues its upward trend, hitting new record highs ahead of the Fed’s decision. However, if the Fed’s dot plot signals fewer rate cuts than expected, concerns over a prolonged period of high interest rates and potential stagflation could weigh on gold prices.
The immediate resistance level to watch is the fresh all-time high at $3,045, followed by R1 resistance at $3,048 and the psychological barrier at $3,050. A breakout above these levels could open the door to R2 resistance at $3,063.
On the downside, the intraday pivot point at $3,024 serves as initial support, followed by S1 support at $3,010 and the critical $3,000 level. If gold falls below this threshold, further downside support emerges at $2,985.
