Gold prices (XAU/USD) remained steady and directionless below the $3,400 level during the first half of Tuesday’s European trading session. Traders are cautious and prefer to wait for clear signals about the Federal Reserve’s plans on interest rates before making new bets.
All eyes are on the two-day Federal Open Market Committee (FOMC) meeting starting Wednesday, which is expected to influence both the US Dollar and gold prices.
Investors widely expect the Fed to lower interest rates at some point in 2025. This view keeps the US Dollar near a three-year low, which supports gold prices. Additionally, ongoing trade tensions and growing geopolitical risks in the Middle East help gold hold steady after it slipped from a near two-month high. This environment encourages caution among traders betting on gold’s decline.
On Monday, Israel hit Iran’s state-run television station. In response, Iran warned it is preparing for its biggest missile attack ever on Israeli soil. US President Donald Trump left the G7 Summit early because of the Middle East conflict. He also asked the National Security Council to meet urgently.
Three tankers caught fire in the Gulf of Oman near the Strait of Hormuz, raising fears of a repeat of similar attacks from 2019, which were linked to Iran. These developments added to the geopolitical uncertainty, giving gold some positive momentum during the Asian session on Tuesday.
Meanwhile, the US Dollar gained some ground ahead of the FOMC meeting. The Federal Reserve is expected to keep interest rates steady for now. Concerns that US tariffs could raise inflation make the Fed cautious about changing rates.
However, the recent rise in the Dollar lacks strong momentum because many investors believe the Fed will start cutting rates again in September. The upcoming policy statement and Fed Chair Jerome Powell’s press conference will be closely watched for clues about future rate cuts.
This information will guide the next major move for both the US Dollar and gold. For now, ongoing trade issues and Middle East tensions are likely to support gold’s safe-haven appeal.
From a technical viewpoint, gold is trading within an upward channel, indicating a short-term uptrend. Positive signals from technical indicators suggest that investors may buy dips near the $3,340–$3,335 support zone. This should help prevent a significant fall in prices. A clear break below this level, however, could shift the trend in favor of sellers.
On the upside, the $3,400 mark stands as immediate resistance. If gold climbs above this level, it could target the $3,434–$3,435 area. Further gains past the recent multi-week high around $3,451–$3,452 could push prices toward the all-time peak near $3,500, last touched in April. This level also aligns with the upper boundary of the rising channel, and a breakthrough here could open the door for even stronger advances.
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