• Gold struggles to gain any meaningful traction as traders seem hesitant ahead of the Fed decision.
• The US-Iran stalemate underpins the safe-haven US Dollar and caps the upside for the commodity.
• The technical setup favors the XAU/USD bears and backs the case for a further depreciating move.

Gold (XAU/USD) is seen consolidating around the $4,600 mark during the Asian session as traders keenly await the outcome of a two-day FOMC policy meeting, due later this Wednesday. The key focus will be on the post-meeting press conference, where comments from the outgoing US Federal Reserve (Fed) Chair Jerome Powell will be scrutinized for cues about the future policy path. The outlook, in turn, will play a key role in influencing the near-term US Dollar (USD) price dynamics and provide some meaningful impetus to the non-yielding yellow metal.

Heading into the key central bank event risk, the uncertainty over the second round of US-Iran peace talks continues to underpin the USD's reserve currency status and keep the Gold price close to a three-week low, touched on Tuesday. In fact, hopes for diplomatic efforts to end the Iran war receded over the weekend after US President Donald Trump canceled his special envoy's planned visit to Pakistan. Furthermore, media reports suggest that Trump is dissatisfied with Iran's new proposal on ending the conflict and reopening the Strait of Hormuz, while setting aside discussions on the nuclear program.

Meanwhile, shipping traffic through the strategic waterway has recently seen a sharp decline due to Iran's restrictions on movements and the US naval blockade of Iranian ports. This, along with the US-Iran stalemate, remains supportive of elevated Crude Oil prices and revives inflationary concerns. This might prompt major central banks, including the US Fed, to adopt a more hawkish stance and turn out to be another factor capping the upside for the Gold price. Hence, any attempted recovery move might still be seen as an opportunity for bearish traders and runs the risk of fizzling out rather quickly.

XAU/USD 1-hour chart

Gold might struggle to register any recovery amid bearish technical setup

Against the backdrop of the recent failure near the 200-hour Exponential Moving Average (EMA), the overnight break below the $4,670-4,665 horizontal support was seen as a key trigger for the XAU/USD bears. Moreover, the Relative Strength Index (RSI) around 40 reflects subdued buying pressure, suggesting that any attempted recovery remains vulnerable while the Gold is capped beneath these overhead levels.

That said, the Moving Average Convergence Divergence (MACD) histogram has turned positive, hinting at a modest recovery attempt. Meanwhile, initial resistance is seen at the horizontal line near $4,668.04, with the 200-period EMA at about $4,703.69 acting as the next, more substantial obstacle that would need to be reclaimed to ease the prevailing bearish pressure. On the downside, weakness below the overnight swing low, around the $4,555, would leave the precious metal exposed to further slippage.

(The technical analysis of this story was written with the help of an AI tool.)