Gold traded in a tight range through the Asian session on Tuesday as traders adopted a risk-off approach ahead of the all-important FOMC interest rate decision. The precious metal has been range-bound for nearly a week as investors wait to see the timing and degree of the forthcoming policy loosening. The dollar and gold prices are likely to be guided by the Fed’s economic forecasts and Chairman Jerome Powell’s commentary in the short run.
Dovish Expectations Limit USD Recovery
Fed fund futures may continue to imply a 25 bps cut in rates at the end of the 2-day FOMC meeting. This dovish outlook has kept the recent US Dollar rebound at bay, which is a headwind for gold on the downside. There are also expectations of increased policy loosening in 2026, which drags down Treasury yields and boosts assets that do not pay interest, like gold.
Geopolitical Tension Boosts Safe-haven Demand
Apart from bets on monetary policy, fresh geopolitical distress over the Russia-Ukraine war is providing additional support to the bullion. Washington may be considering a review of its aid to Kyiv, and slow-moving peace talks are also pressuring market risk sentiment. As such, safe-haven buying continues to underpin support near $4,174–$4,175, as gold remains supported above the initial short-term floor.
On the other hand, we have some of the primary US data, like ADP employment and JOLTS job openings, scheduled later in the day, which may cause temporary volatility. Given that, traders will probably stay on the sidelines awaiting clarity from the Fed meeting outcomes. A technically driven move above the $4,245–$4,250 range would likely confirm a corrective rally to $4,300 and negatively influence short-term traders, while a close below monthly lows near $4,163 would pave the way for further downside toward around $4,100.
