Key Points:
- Gold fell 0.7% to $3,663.93 after hitting a record $3,702.95 on Tuesday.
- The RSI dropped to 75 from 81, signalling cooling momentum after overbought conditions.
- The Fed is expected to cut rates by 25bps; Deutsche Bank raises its 2026 forecast to $4,000/oz.
Gold prices slipped on Wednesday after briefly touching a new record high, with spot gold down 0.7% at $3,663.93 per ounce as of 09:05 GMT.
The dip followed Tuesday’s all-time high of $3,702.95, a level that analysts believe may have attracted strong options-related selling and profit-taking flows.
US gold futures for December delivery mirrored the decline, falling 0.7% to $3,700.10. Analysts at StoneX noted that gold has struggled to sustain moves beyond $3,700 on several occasions, with Rhona O’Connell suggesting that “option writers defending that level” could be a factor.
The pullback comes just hours ahead of the Federal Reserve’s highly anticipated policy decision. While markets widely expect a 25 basis point rate cut, attention will focus on Fed Chair Jerome Powell’s remarks for clues on how far and how fast rates may fall in the coming months.
President Trump has reiterated calls for a more aggressive cut, though the consensus points to a more cautious easing path, potentially with as many as three dissenting votes on the FOMC.
Dollar Rebounds, But Yields Stay Subdued
The dollar index (USDX) rose 0.2% after slipping to a two-month low earlier in the week, applying some pressure on gold by lifting the opportunity cost of holding non-yielding bullion.
Meanwhile, US 10-year Treasury yields hovered near five-month lows, providing a partial counterbalance.
Despite the dip, underlying demand remains firm. The SPDR Gold Trust—the world’s largest gold-backed ETF—reported a 0.32% increase in holdings, rising to 979.95 metric tons on Tuesday from 976.80 tons the previous day. This reflects continued investor appetite for gold as a hedge against both economic and geopolitical uncertainty.
Tuesday’s US retail sales data came in stronger than expected, suggesting resilient consumer activity. However, analysts warn that rising tariffs, slower job growth, and creeping inflation pose risks to the durability of household spending—conditions that could keep gold attractive as a long-term store of value.
Technical Overview
Gold (XAU/USD) is trading at 3667.56, down 0.61% on the day, easing slightly after a strong September rally. The metal has gained sharply from the March low of 2832.68, breaking through the key 3400 resistance level and extending towards the 3600–3700 zone, where it is now consolidating.
The bullish structure remains intact, with prices well above the short-term and medium-term moving averages.
Momentum indicators show a slight cooling. The MACD is still in positive territory, but the histogram reflects a slowdown in buying pressure, hinting that some profit-taking may be underway. Still, as long as gold holds above 3400, the broader uptrend remains strong.
Looking ahead, immediate support sits at 3400, followed by 3327. On the upside, a sustained move above 3700 could open the door towards 3750 and beyond, while failure to hold current levels may trigger a deeper pullback towards support.
Cautious Forecast
Over the short term, gold may consolidate between $3,630 and $3,700 as traders assess the Fed’s messaging and any shifts in the macro outlook. A 25bps cut coupled with cautious forward guidance could keep gold buoyed above $3,650, though a hawkish tilt may pressure it toward $3,600.
In the medium term, continued central bank easing, geopolitical tensions, and ETF inflows should support the bullish case.
Deutsche Bank’s upward revision of its 2026 average gold forecast—from $3,700 to $4,000—adds longer-term validation to the uptrend. Still, traders should be alert to any profit-taking spikes around resistance zones, particularly if the dollar extends its rebound.
