Gold prices remain stable below $3,400; looking forward to some substantial impetus from the Federal Reserve

Gold prices struggle to gain momentum as traders remain cautious ahead of the Federal Reserve's interest rate decision.

The dollar retreats under the influence of bets on a Fed rate cut, supporting commodity prices.

Trade-related uncertainties and rising geopolitical tensions further benefit safe-haven asset gold/XAU/USD.

Gold prices (XAU/USD) continued to consolidate during Wednesday's Asian trading session, remaining below the $3,400 mark. Traders now seem reluctant to place orders, opting to wait for more clues regarding the Federal Reserve's (Fed) rate cut path before making new directional bets on the non-yielding gold. Therefore, the focus will be on the results of the two-day FOMC meeting scheduled for later today, which will influence the price dynamics of the dollar (USD) and determine the short-term trend of the commodity.

As the key central bank event risk approaches, the dollar has retreated from strong gains on Tuesday, with the market generally accepting that the Fed will resume its rate cut cycle in September. Additionally, the escalating geopolitical tensions in the Middle East and ongoing trade-related uncertainties continue to exert pressure on investor sentiment and should help limit further declines in gold prices. Thus, it would be prudent to wait for strong follow-up selling before continuing the pullback from near two-month highs this week.

Daily Market Update: Gold Bulls Await Fed Policy Update Before Placing New Bets

Investor attention remains focused on the Federal Reserve's interest rate decision to be announced this Wednesday. The U.S. central bank is expected to keep the benchmark interest rate unchanged amid concerns that tariffs from President Donald Trump could drive up consumer prices.

Consequently, the accompanying policy statement, including the updated "dot plot," as well as Fed Chairman Jerome Powell's remarks at the post-meeting press conference, will be closely monitored for clues regarding the future rate cut path. The outlook, in turn, will affect gold prices.

As the key central bank event risk approaches, disappointing U.S. macro data released on Tuesday pointed to an economic slowdown and reaffirmed bets that the Fed would lower borrowing costs in September. This limited the dollar's rebound to weekly highs.

The U.S. Census Bureau reported that retail sales fell by 0.9% in May, while a contraction of 0.7% was expected, following a decline of 0.1% in April. Additionally, U.S. industrial production failed to meet expectations, contracting by 0.2% in May, while the previous month was revised to a growth of 0.1%.

Meanwhile, the conflict between Israel and Iran and ongoing aerial exchanges have continued for the sixth day. Trump has intensified his rhetoric, demanding Iran's unconditional surrender, further fueling speculation about potential U.S. intervention in the war.

On the trade-related front, Trump told reporters aboard Air Force One that tariffs on the pharmaceutical industry are "coming soon." This adds a layer of uncertainty ahead of the July 9 deadline for raising reciprocal U.S. tariffs and continues to exert pressure on investor sentiment.

Technical Patterns for Gold Prices Indicate Minimum Resistance Path Upwards

From a technical perspective, the formation of an upward channel indicates a favorable short-term upward trend. Additionally, the positive oscillator on the daily chart suggests that any intraday decline may still be viewed as a buying opportunity, which should help limit the downside for gold prices around the $3340-$3335 area, or the lower boundary of the trend channel. However, if the latter is effectively broken, it will negate the positive outlook and lean towards bearish traders.

On the other hand, the $3400 level may continue to act as a direct barrier. If this level is breached, gold prices could rise to the $3434-$3435 area. Some follow-up buying that leads to a further strong breakout above the $3451-$3452 area, or the multi-week high reached on Monday, would challenge the historical high of around $3500, which coincides with the resistance of the upward channel. A breakout above this level would be seen as a new trigger point for bulls