Gold prices held steady near the 50-day moving average, with focus shifting to forward guidance and the timing of interest rate cuts.
2026-03-18 19:51:29
On Wednesday (March 18), spot gold was holding steady with a slight downward bias during the European session, as traders opted to wait and see ahead of today's release of the Federal Reserve's interest rate decision, monetary policy statement, and economic forecasts.
The market is attempting to balance two key forces: rising geopolitical risks in the Middle East (the escalating conflict between the US and Iran since February 28) and uncertainty surrounding the timing of the next Federal Reserve rate cut. Neither of these forces is currently sufficient to drive a clear breakout in gold prices, but since the outbreak of the Iran war, gold prices have generally trended downwards.
The market widely expects the Federal Reserve to keep the federal funds rate unchanged at 3.5%-3.75%. Given the uncertainty surrounding the war, and especially with inflation still above the 2% target and trending upward, policymakers are appearing cautious. This rate decision was "foreshadowed" weeks in advance, so traders are paying closer attention to what follows. After the Fed's statement, the most valuable information will come from Powell's press conference—the summary of economic projections and Chairman Powell's expected clues about whether there are still plans to cut rates later this year.
Expectations for interest rate cuts have been significantly dampened.
Gold traders' expectations for interest rate cuts have clearly shifted, evidenced by the major top of $5602.23 recorded on January 29 (the day after the last Fed meeting). At the beginning of the year, the market anticipated two to three earlier rate cuts this year, but pricing in has now pushed it back to around October or December. Although prices haven't fully reflected this, policymakers might completely postpone rate cuts if rising energy costs lead to persistently high inflation. In this scenario, it would be unfavorable for gold, as higher interest rates would make interest-bearing assets more attractive, thus limiting upside potential for gold prices.
War and oil prices provided support, but the Fed is putting pressure on the economy.
Geopolitical risks have continued to rise over the past three weeks. The Middle East conflict has escalated, and oil prices have broken through $100 per barrel. These events have fueled inflation concerns, typically benefiting gold as an inflation hedge. However, this benefit is being offset by the Federal Reserve's restrictive policy stance. Simply put, gold prices are supported by inflation fears on one hand, and suppressed by high interest rates on the other.
Everything depends on what Powell says today.
Looking ahead, the direction of spot gold is highly dependent on the Fed's guidance. In my view, if policymakers hint at fewer rate cuts or later cuts, gold prices may continue to be under pressure or fall further. Conversely, if Powell hints at continued easing later this year, coupled with ongoing geopolitical pressure, gold prices are expected to stabilize and attempt an upward rebound.
Technical Analysis
(Spot gold daily chart source: FX678)
While fundamentals seem to be weighing heavily on Powell's post-meeting comments, daily chart technical analysis clearly shows that the next move depends on traders' reaction to the 50-day moving average (currently around $4930). This moving average has become a "watershed": if the Fed leans hawkish (fewer signals/later rate cuts), coupled with gold prices continuing to fall below the 50-day moving average, it could trigger a sharp decline into the retracement zone of $4744.34-$4541.88.
If the Fed adopts a neutral to dovish stance and re-establishes support at the 50-day moving average, a rebound could begin, at least retesting $5143.89.
At 19:44 Beijing time, spot gold was trading at $4,940.33 per ounce, down 1.30%.
The market is attempting to balance two key forces: rising geopolitical risks in the Middle East (the escalating conflict between the US and Iran since February 28) and uncertainty surrounding the timing of the next Federal Reserve rate cut. Neither of these forces is currently sufficient to drive a clear breakout in gold prices, but since the outbreak of the Iran war, gold prices have generally trended downwards.
The market widely expects the Federal Reserve to keep the federal funds rate unchanged at 3.5%-3.75%. Given the uncertainty surrounding the war, and especially with inflation still above the 2% target and trending upward, policymakers are appearing cautious. This rate decision was "foreshadowed" weeks in advance, so traders are paying closer attention to what follows. After the Fed's statement, the most valuable information will come from Powell's press conference—the summary of economic projections and Chairman Powell's expected clues about whether there are still plans to cut rates later this year.
Expectations for interest rate cuts have been significantly dampened.
Gold traders' expectations for interest rate cuts have clearly shifted, evidenced by the major top of $5602.23 recorded on January 29 (the day after the last Fed meeting). At the beginning of the year, the market anticipated two to three earlier rate cuts this year, but pricing in has now pushed it back to around October or December. Although prices haven't fully reflected this, policymakers might completely postpone rate cuts if rising energy costs lead to persistently high inflation. In this scenario, it would be unfavorable for gold, as higher interest rates would make interest-bearing assets more attractive, thus limiting upside potential for gold prices.
War and oil prices provided support, but the Fed is putting pressure on the economy.
Geopolitical risks have continued to rise over the past three weeks. The Middle East conflict has escalated, and oil prices have broken through $100 per barrel. These events have fueled inflation concerns, typically benefiting gold as an inflation hedge. However, this benefit is being offset by the Federal Reserve's restrictive policy stance. Simply put, gold prices are supported by inflation fears on one hand, and suppressed by high interest rates on the other.
Everything depends on what Powell says today.
Looking ahead, the direction of spot gold is highly dependent on the Fed's guidance. In my view, if policymakers hint at fewer rate cuts or later cuts, gold prices may continue to be under pressure or fall further. Conversely, if Powell hints at continued easing later this year, coupled with ongoing geopolitical pressure, gold prices are expected to stabilize and attempt an upward rebound.
Technical Analysis
(Spot gold daily chart source: FX678)
While fundamentals seem to be weighing heavily on Powell's post-meeting comments, daily chart technical analysis clearly shows that the next move depends on traders' reaction to the 50-day moving average (currently around $4930). This moving average has become a "watershed": if the Fed leans hawkish (fewer signals/later rate cuts), coupled with gold prices continuing to fall below the 50-day moving average, it could trigger a sharp decline into the retracement zone of $4744.34-$4541.88.
If the Fed adopts a neutral to dovish stance and re-establishes support at the 50-day moving average, a rebound could begin, at least retesting $5143.89.
At 19:44 Beijing time, spot gold was trading at $4,940.33 per ounce, down 1.30%.
- Risk Warning and Disclaimer
- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
