Gold remains steady as traders await the Federal Reserve’s upcoming interest rate decision.

Gold (XAU/USD) trades slightly lower on Wednesday, hovering just below $2,760 after a volatile start to the week. With the Federal Reserve's interest rate decision looming, market activity remains subdued as traders await further cues. Lower U.S. interest rates are generally seen as supportive for gold prices.

The Fed is widely expected to keep rates steady within the 4.25%-4.50% range, shifting trader focus to Fed Chair Jerome Powell's remarks on the policy outlook. However, expectations for any groundbreaking statements may be misplaced. Powell is unlikely to address former President Donald Trump's criticism of the Fed or his calls for lower rates. Instead, he is expected to reaffirm the central bank's independence and its commitment to a data-driven approach, prioritizing inflation control and job market stability.

Daily Market Movers: Don't Expect Much from Powell

• Dovish Pause Expected: According to Bloomberg, markets anticipate Fed Chair Jerome Powell to signal a dovish pause. This could push U.S. yields lower, creating an opportunity for gold to surge and potentially hit a new all-time high.
• Gold Demand Rises: Australian hedge funds are increasing their gold exposure ahead of U.S. President Donald Trump's second term. As reported by Financial Review, they expect his administration to struggle with rising debt, making gold a hedge against potential bond market turmoil.
• Key Fed Events: The Federal Reserve will announce its monetary policy decision at 19:00 GMT, followed by a press conference with Powell at 19:30 GMT.

Technical Analysis: Path to a New All-Time High Remains Open

Gold is well-positioned to reach a fresh all-time high if the Federal Reserve delivers a dovish pause on Wednesday. After recovering from its earlier decline this week, gold is currently trading flat. However, volatility is expected to rise, with the potential for a record-breaking move driven by Fed Chair Jerome Powell's comments.

Key Support Levels:

• The first support sits at $2,721, a former double top from November and December that was broken on January 21.
• Below that, $2,709 (the October 23, 2024, low) serves as a second key support level.
• If both levels give way, a deeper decline toward $2,680 could trigger a broader sell-off.

Upside Potential:

• Gold remains within reach of its all-time high at $2,790, just about 1% above current levels.

• A break above this mark could pave the way for a new record, with $2,800 emerging as the next resistance.

• While some analysts project $3,000 in the long run, clearing $2,800 would be the next significant milestone.