Gold stands at the FOMC crossroads... Considering the $4,190 support level for 'Dove' as well

• The Fed’s 25bp rate cut almost confirmed… Focus shifts to next year’s stance
• Dollar weakness and geopolitical tensions drive safe-haven demand… but direction remains uncertain
• [Technical Analysis] Serious correction concerns if below $4190… Resistance at $4260

At the start of the week as Asian markets open, gold prices(XAU/USD) are repeatedly rebounding from lows and moving sideways within a box range. The increased likelihood of a rate cut by the Fed has sparked a buying sentiment at lower prices, while dollar weakness and geopolitical tensions support gold’s status as a safe asset.

From a technical perspective, the current situation is sensitive. The $4190 level, where the 200-hour exponential moving average(EMA) is located, is acting as a short-term inflection point. If this support breaks, a chain of sell signals could be triggered. Further declines below $4100, passing through the monthly low($4163~4164), could undermine the upward trend since late October. On the other hand, resistance is concentrated in the $4250~4260 zone, and a close above this upper boundary is necessary to pave the way for further gains.

Macroeconomic background: Easing concerns amid slowing inflation and weakening employment

The Fed now has ample justification to consider a rate cut. The September Personal Consumption Expenditures(PCE) price index released by the U.S. Department of Commerce rose 2.8% year-over-year, matching expectations, and core PCE cooled from 2.9% to 2.8%. Employment indicators also suggest a cooling market, reinforcing the narrative of a ‘slowing pace’ of monetary policy.

CME FedWatch indicates about a 90% probability of a 0.25%(bp) rate cut at this FOMC. Beyond a simple cut, markets are also considering the possibility of an additional cut in April next year.

Geopolitical risks are also influencing the environment. Russia’s attacks on Ukraine’s energy infrastructure and difficulties in peace negotiations have suppressed risk appetite, boosting demand for safe assets like gold.

Market clues: Powell’s ‘2025 scenario’

Ultimately, investors are paying attention not just to whether a cut occurs, but to its direction. Chairman Powell’s press conference and the dot plot(Dot Plot) revisions will determine the trajectory of interest rates next year, directly affecting whether gold prices break out of the current box range. Market participants are cautiously holding off on active positioning until the FOMC results on Wednesday(local time). This cautious stance explains the continued sideways movement within a narrow range.

Bullish scenario: Breakthrough of the $4300 psychological level

To target the upside, prices must definitively close above resistance at $4250~4260. Success here could lead to testing the psychological barrier at $4300 after passing through $4277~4278. Reclaiming this level would signal the resumption of an upward rally after late November.

Downside risk: What if it falls below $4190?

Conversely, if the 200-day moving average at $4190 is broken, a surge of technical sell orders could occur. The monthly low$4163~4164 serves as a secondary support, but in a severe correction phase, this level might also be breached. Entering below $4100, which would break the short-term upward trend since late October, cannot be completely ruled out.