XAU/USD consolidates near record highs ahead of the Fed’s rate decision, with geopolitical risks and oil price swings adding volatility.
Gold (XAU/USD) remains above $4,000 on Wednesday, trading in a tight range as investors await the Federal Reserve’s monetary policy announcement. Heightened geopolitical tensions, including missile strikes by Iran’s IRGC and US-led counterstrikes in Iraq, have fueled uncertainty, lifting oil prices and supporting the US Dollar Index (DXY) near 101.40.
The Fed is expected to keep interest rates unchanged at 3.50%-3.75%, though traders assign a 31% chance of a 25-basis-point hike, per the CME FedWatch Tool. Higher rates typically weigh on gold, as they boost the appeal of yield-bearing assets. WTI crude oil reversed losses, climbing over 3.5% to around $81.00 after a three-day sell-off.
Markets remain on edge ahead of the Fed’s 18:00 GMT decision and Chair Jerome Powell’s subsequent press conference. Any surprise hawkish shift could pressure gold, while a dovish tone may reinforce its safe-haven appeal.