Gold Forecast: XAU/USD loses strength ahead of the Fed decision

Once again, gold is showing signs of short-term weakness. Over the last 4 trading sessions, XAU/USD has accumulated a decline of nearly -2.4%, highlighting a relevant selling bias ahead of the Federal Reserve decision.

For now, selling pressure remains in place as the market waits for a possible more aggressive tone from the U.S. central bank. This expectation has limited gold’s ability to sustain a consistent recovery and could continue to affect the precious metal if the Fed confirms a more restrictive stance for upcoming decisions.

Fed day arrives

During tomorrow’s session, July 29, 2026, the Federal Reserve is expected to announce its decision. According to the latest probability table from CME Group, the market assigns a probability above 70% that the central bank will keep interest rates unchanged, meaning no major surprises are expected in the immediate decision.

However, the most relevant point will be the central bank’s message after the announcement. The market will remain focused on whether the probability of a possible rate hike for the September 16 meeting remains near 56%. The Fed’s comments could help confirm whether a higher interest rate may become part of the U.S. monetary policy outlook over the coming months.

Source: CMEGROUP

Attention will also be on the central bank’s assessment of inflation. This has been one of the main factors leading the market to consider possible rate hikes. As of the June data, annual inflation measured by the CPI stood at 3.5%. Although this reading moved away from the year’s high of 4.2%, it remains above the Fed’s 2.00% target.

For this reason, the central bank could once again highlight inflation as an important risk that may require a more aggressive stance over the next few months. This scenario would not be entirely unexpected, considering that current inflation levels remain far from the official target.

Source: TradingEconomics

In this context, a more aggressive Fed could continue to strengthen the U.S. bond market. In previous sessions, the 10-year Treasury yield reached new 2026 highs, increasing the appeal of one of the most important safe-haven markets.

This dynamic is key for gold, as bonds are positioned as one of its main substitute markets. When yields rise, gold’s relative appeal can decline, especially because the precious metal does not pay interest. This inverse relationship has already been observed in recent sessions: while bond yields maintain an upward slope, gold has shown weakness.

In fact, the correlation coefficient remains near -0.75, reflecting a strong inverse relationship between yield movements and the price of gold.

Source: TVC, StoneX, Tradingview

The dynamic continues to depend heavily on the behavior of yields. If the bond market continues to offer more attractive returns, it could keep limiting room for a consistent recovery in gold. In addition, if the Fed reinforces expectations of a more aggressive monetary policy stance, yields could remain strong and limit demand for XAU/USD over the next few trading sessions.

 

Technical forecast for gold

Source: StoneX, Tradingview

• Neutrality begins to gain relevance: Although gold’s daily chart still maintains a long-term bearish trend line, recent movements have started to show a more neutral short-term phase. If price fails to define a clear direction over the next few sessions, a more relevant sideways range could begin to form and become key for the coming trading weeks.
   

• RSI: Now, the RSI is moving near the neutral 50 level. This suggests a balance between bullish and bearish impulses over the last 14 sessions. This dynamic reflects a possible indecision bias that could continue if the indicator maintains this behavior.
   

• MACD: A similar reading can be seen in the MACD, as the histogram remains close to the neutral 0 area. This suggests that the average strength of short-term moving averages is in balance, reinforcing the possibility of an indecision phase in gold.
   

Key levels to watch:

• 4,376 USD – Crucial resistance: This relevant bullish barrier coincides with the 23.6% Fibonacci retracement and with important highs from previous weeks. Price movements above this area could open room for the formation of a short-term bullish trend line over the next few sessions.
   
• 4,185 USD – Near-term barrier: This key neutral area aligns with the long-term bearish trend line and the 50-period simple moving average. Moves above this level could weaken the bearish structure seen in previous months. However, if price fails to move consistently away from this reference, it could continue to highlight a phase of indecision and open room for a more relevant sideways range.
   
• 3,886 USD – Critical support: This level is associated with relevant lows from October 2025 and is considered the next most important bearish barrier. Movements toward this area could once again highlight a clearer selling bias and extend the bearish trend line as the dominant technical structure over the coming trading weeks.
   

Written by Julian Pineda, CFA, CMT – Market Analyst

Follow him on: @julianpineda25