Gold Analysis: XAU/USD Remains Neutral Ahead of Fed Minutes

As the week unfolds, gold dynamics have been defined by prolonged consolidation. Over the last 5 sessions, XAU/USD has barely registered an average variation of 1.00%, lacking clear direction and cementing a strong neutral bias. This behavior contrasts with previous weeks, where the precious metal saw swings exceeding 3.00%. This new sideways phase is largely due to the ceiling gold has hit amid sustained bond market behavior and the wait for the Federal Reserve minutes, which could impact its substitute markets. Unless a heavier fundamental catalyst emerges, this indecision is likely to continue dominating price action in the short term.

What to Expect from the Federal Reserve Minutes?

Tomorrow, the US central bank will release its meeting minutes, an event where the market will look for details on the latest policy discussions. Investors will closely scrutinize whether several members considered raising interest rates or just how concerned the Fed is about inflationary pressures stemming from energy prices.

Currently, the CMEGROUP probability tool reflects a 65% chance that the benchmark rate will hold steady at 3.75% during the September 16 decision. Furthermore, there is over a 50% probability that this same pause scenario will repeat at the late-October meeting. This suggests the market is pricing in a cautious Federal Reserve in the near term. However, this expectation could shift if the minutes reveal heightened concerns over inflation and if a significant number of members lean toward evaluating future rate hikes.

Source: CMEGROUP

This event is crucial for the US 10-year Treasury bond market, one of the main substitute assets for gold. Despite expectations of a monetary pause, yields remain above the 4.7% zone, near their 2026 highs, cementing the appeal of these instruments over the precious metal.

Source: TradingEconomics

In this context, the minutes will be decisive for both fixed income and the US dollar. If the document opens the door to a more hawkish Fed, both markets could gain traction. A strengthening of these alternative assets would diminish gold's appeal as a safe haven, which could stall the recovery attempts seen in recent weeks and trigger a potential drop in short-term demand.

In fact, activity in the gold market has already started to cool off in the sessions leading up to the release. Trading volume for metal futures on August 17 stood at 141,000 contracts, a figure far below the more than 200,000 daily contracts seen earlier in the month. This sustained drop in volume reflects investor caution ahead of potential central bank signals and suggests a lack of appetite for the asset while the monetary outlook remains up in the air.

Source: CMEGROUP

With this in mind, gold is likely to remain capped by expectations surrounding its substitute markets, maintaining its neutral stance in the near term. However, if the minutes confirm a more restrictive tone and bonds and the dollar gain traction, fresh selling pressure could be unleashed on XAU/USD over the coming weeks.

 

Gold Technical Outlook

Source: StoneX, Tradingview

• Bullish momentum faces a slowdown: Average gold price action reflects a clear phase of indecision. Rather than attempting to form a new uptrend line, the price is currently consolidating. As long as key levels remain unbroken, this sideways range could cement itself as the dominant structure in the upcoming sessions.
   

• RSI: The RSI line shows noticeable flattening behavior, reflecting a loss of momentum from the bullish bias seen in previous sessions. If this behavior persists, the indicator will confirm the neutral phase currently dominating the market.
   

• MACD: The MACD histogram remains near the neutral 0 line, suggesting that short-term moving average momentum is in balance. This technical reading reinforces the expectation that indecision could remain a primary factor for gold.
   

Key Levels to Watch:

• $4,500 (Crucial Resistance): A major bullish barrier aligning with the 200-period simple moving average. A sustained close above this level could mark a structural shift on the chart and pave the way for a more prominent bullish bias in the coming sessions.
   
• $4,378 (Nearby Barrier): The current neutral zone where price action has stalled over the last two weeks. It acts as a key retracement level; if the price fails to break cleanly away from this area, sideways trading could extend in the short term.
   
• $3,984 (Critical Support): Matches the 2026 lows and stands as the chart's most important support level. A drop to this level could reignite a bearish bias and breathe new life into the downtrend line that dominated the technical structure for weeks.
   

Written by Julian Pineda, CFA, CMT – Market Analyst

Follow him on: @julianpineda25