Gold Prices Slightly Drop Amid Speculation on the Fed’s Hawkish Policy

The price of gold (XAU/USD) moved lower again in trading on Tuesday (9/12) as market players became increasingly cautious ahead of the Federal Reserve (The Fed) interest rate decision. Based on market data, XAU/USD is trading at around $4,195, down 0.27% after touching a daily high of $4,219. This movement reflects defensive market sentiment ahead of the Fed’s monetary policy meeting, which is expected to cut interest rates again for the third time in a row towards 2026.

According to Dupoin Futures Indonesia analysis, Andy Nugraha, the prospect of gold is currently still on the path of a strengthening bullish trend, referring to the combination of candlestick patterns and the Moving Average technical indicator which shows that upward momentum still dominates. However, short-term pressure remains dependent on the Fed’s policy rhetoric and the future direction of the US economy.

Technically, Andy projects today’s gold movement to be in two main scenarios. If bullish pressure continues and market sentiment favors safe-haven assets, gold prices have the potential to retest the nearest resistance at $4,218. This level is an important psychological point, which, if successfully passed, could open up space for further strengthening towards the next resistance zone.

However, if gold fails to maintain its upward momentum and the market responds to dollar strength again, a potential short-term correction points to the $4,180 area. This level is the closest support as well as a decision area for market players in determining the next direction.

Global market players are now waiting for the Fed’s interest rate decision which is scheduled to be released on Wednesday US time. Based on CME FedWatch data, the probability of cutting interest rates by 25 basis points reached 90%, up significantly from 66% last November. However, the market is worried that the Fed will convey a hawkish tone in its press conference, including through the release of a dot-plot that will provide clues about the direction of interest rates throughout 2026.

“The market is waiting for the Fed’s decision and further policy direction,” said Peter Grant, Vice President and Senior Metals Strategist at Zaner Metals.

Market sentiment is also influenced by a number of United States economic data, including employment reports, ADP Employment, and JOLTS Job Openings data. If the data released is weaker than expectations, the chances of further interest rate cuts increase, thereby supporting an increase in the price of gold as a non-yielding asset.

Apart from monetary factors, geopolitical tensions also provide additional support for demand for gold as a safe-haven asset. Tensions between US President Donald Trump and Ukrainian President Volodymyr Zelenskyy have risen again, strengthening demand for hedge assets.

However, the strengthening of the US dollar and rising US Treasury bond yields—with the 10-year yield rising to 4.168%—posed short-term obstacles to gold’s rally.

Overall, Dupoin Futures Indonesia assesses that even though gold is corrected, the bullish bias is still dominant. The market is now waiting for a big catalyst from the Fed’s statement to determine the direction of the next movement.

This press release has also been published on VRITIME