Editor’s Note
As gold hovers near historic highs, all eyes turn to next week’s FOMC meeting. The Fed’s policy decision is likely to set the near-term direction for the precious metal, following a week of sharp volatility driven by shifting sentiment and dollar movements.
Despite two days of volatility, gold is still trading near record levels, reminding traders how quickly market sentiment can shift. Earlier, spot gold set a new record near $4,888 per ounce, but then declined as the market stabilized and the US dollar strengthened.
All attention is now focused on the upcoming Federal Reserve meeting scheduled for January 27-28, 2026. The policy decision will be announced at 2:00 PM Eastern Time on Wednesday, January 28, followed by the Chairman’s press conference at 2:30 PM Eastern Time.
While the interest rate decision itself may not be the biggest surprise, signals regarding future cuts, inflation progress, and financial conditions could swiftly impact the US dollar and bond yields. These two factors often dictate the short-term direction of XAU/USD.
The direction of gold next week will depend on whether the Federal Reserve adopts a more dovish or more cautious stance regarding inflation and future interest rate cuts.
The market currently expects the Fed to make no change to interest rates, so the biggest risk lies in an unexpected tone in the statement or the Chairman’s press conference.
Here are some key factors to watch:
– The Fed’s guidance on rate cuts in 2026
– Real yields and the US dollar
– Positioning and profit-taking
– Risk sentiment in global markets
This could occur if the Federal Reserve holds rates steady and shows greater openness to cuts by the end of 2026.
You might see:
– A softer US dollar and easing yields.
– Gold could rebound towards $4,830 to $4,858 and then test the record area around $4,887 if momentum builds.
This could happen if the Fed gives no clear signals on the timing of rate cuts and avoids doing so.
You might see:
– Price trading between support near $4,803 and resistance near $4,831.
– Minor fluctuations continue, but the trend remains intact.
This situation could arise if the Federal Reserve strongly opposes price cuts or uses more cautious language regarding inflation.
You might see:
– A stronger US dollar and rising interest rates.
– Gold tests $4,803, and a break below opens the door to lower support levels, including areas near the 100-day average in the lower to mid-$4,700s.
Gold is expected to trade within a limited range until the conclusion of the FOMC statement and press conference, with significant intraday volatility likely.
The most probable situation is consolidation from higher levels, as inflation is not low enough to force rapid relief, while structural demand remains strong enough to support declines.
Base Case Range (Next Week):
Primary Support Target: $4,803 to $4,794, and $4,713 if the decline continues.
Primary Resistance Point: $4,830 to $4,858, then the record area near $4,888.
A clear break above the highs is possible but would likely require a Fed message that lowers real yields, a resurgence in risk-hedging demand, or both.
As of today’s date, XAU/USD is trading in the mid-$4,800s, following a pullback from the record highs seen earlier this week.
Metric | Latest Reading
— | —
Spot Gold (XAU/USD) Bid | 4,843.11
Day’s Range | 4,772.26 – 4,832.97
52-Week Range | 2,729.80 – 4,888.22
Record High | $4,888 per ounce area
The psychological hurdle for next week is the area near the $4,888 level. Market behavior just below record levels is different as sellers use this level to take profits, while late buyers hesitate because the risk-reward ratio deteriorates at the top of the range.
