On Wednesday, September 16, we noted that a slew of recent U.S. economic data has fueled rising expectations for a Federal Reserve rate hike, pushing the dollar to a one-week high and placing significant downward pressure on gold prices. We advised monitoring resistance at $4,317 per ounce, followed by $4,335, with support at $4,253 and then $4,200. During Tuesday's Asian trading session, gold met resistance at $4,317 and began a choppy decline. It stabilized at $4,261 in European trading before recovering. In U.S. trading, prices faced resistance at $4,310, keeping the market in a weak consolidation phase.
Overall, gold oscillated between our projected resistance at $4,317 and support at $4,253. While prices did not probe new lows, the rebound momentum remained subdued. According to a Wolfinance star-rated analyst, gold continued to face pressure in Tuesday's trading, with market expectations of a Fed rate hike still capping prices. Recent U.S. data showed non-farm payrolls significantly beating estimates, suggesting the labor market is not as weak as previously feared. The PPI reading surpassed expectations, pointing to persistent inflation, while CPI also came in above forecast, further cementing expectations for a September rate hike. The probability of a hike has surged from 50% to nearly 90%, driving the dollar to a one-week high and directly pressuring gold.
Attention has now shifted to the Fed's rate decision due early Thursday morning. With expectations largely priced in, the immediate impact of a hike on gold may be muted. The key question is whether this will be a one-off increase or the start of a tightening cycle. If the Fed delivers a more hawkish tone than anticipated, gold faces sustained downside risk. Conversely, if the hike is a precautionary measure to curb inflation rather than the beginning of a new cycle, bullion could stage a meaningful rebound after absorbing the initial pressure.
On the daily chart, gold remains in a downtrend, trading with a bearish bias. Immediate resistance is seen at the 5-day moving average of $4,310, which also marks Tuesday's U.S. rebound high, followed by the weekly Bollinger Band midline at $4,317, where prices encountered repeated rejection during Monday's U.S. and Tuesday's Asian sessions. A breakout above this level would open the door to the 10-day moving average at $4,370 and the psychological $4,400 mark. On the downside, support lies at this week's low of $4,253, followed by the $4,200 level, near the daily Bollinger lower band. A decisive break below would amplify the downside risk. The 5-day moving average is in a bearish crossover, with MACD, KDJ, and RSI indicators all pointing lower, signaling near-term vulnerability for gold.
For today's session, the intensifying Fed rate hike expectations continue to cap gold's upside, limiting any rebound scope. With investors eyeing tonight's Fed decision, the focus will be on whether it is a one-off hike or the start of a cycle, which will significantly influence near-term volatility. The recommended approach is to maintain a range-bound mindset, watching resistance in the $4,310–$4,317 zone. A breakout could target $4,370 and $4,400. On the downside, support is at $4,253, followed by $4,200, with a break below increasing the risk of further declines.