Gold Stuck, Needs a New Catalyst!
Gold prices (XAU/USD) moved sideways and remained around the psychological $5,000 level on Wednesday, extending their consolidation phase for the third consecutive day. Market participants chose to hold positions ahead of the FOMC decision, which is expected to keep interest rates unchanged, but with the primary focus being on the policy statement, the latest economic projections, and the dot plot.
The next direction is considered highly dependent on Fed Chairman Jerome Powell's tone regarding inflation risks, especially following the war-fueled surge in energy prices. Inflation concerns have led the market to cut expectations for interest rate cuts in 2026, from several previously to potentially just one in December, which has supported the US dollar and limited the upside potential for gold as a non-yielding asset.
Geopolitically, the US-Israel conflict with Iran and the effective closure of the Strait of Hormuz, which handles approximately 20% of global oil supply, have increased disruptions in energy trade. This has reinforced the inflation narrative and increased volatility across assets, reflected in the adjustment in US interest rate expectations.
Although the US dollar tends to draw support from changing policy expectations, geopolitical uncertainty remains a key driver of safe-haven demand. Therefore, gold's decline is considered limited as investors continue to seek a hedge against the risk of escalation.
Iran confirmed the deaths of security official Ali Larijani and Basij Forces chief Gholamreza Soleimani in an Israeli airstrike, while the US military also reportedly targeted locations on the Iranian coast near the Strait of Hormuz. The risk of further retaliation and regional escalation are factors maintaining short-term interest in gold.
In addition to the Fed's decision, the market is also awaiting policy updates from other major central banks, such as the ECB, the Bank of Japan, and the Bank of England, in the latter half of this week. A combination of global interest rate signals, dollar dynamics, and geopolitical developments are expected to remain key determinants of the direction of XAU/USD. (asd)
Source: Newsmaker.id
