Gold Faces Critical Test as DXY Holds Firm Ahead of FOMC

Gold remains at a critical technical and fundamental crossroads ahead of Kevin Warsh's first Federal Reserve meeting. While easing Middle East tensions and falling oil prices are helping reduce inflation concerns, markets remain cautious due to unresolved issues in the US-Iran peace agreement and the possibility of a hawkish Fed stance. A stronger US dollar continues to be the main challenge for gold, with the DXY holding above key support and maintaining its broader bullish trend.

From a technical perspective, the US Dollar Index remains bullish while holding above major support levels and could strengthen further if it breaks above the important 100.60 to 100.80 resistance zone. A hawkish Fed outcome would likely reinforce dollar strength and increase pressure on precious metals.

Gold is attempting to reclaim the key 4400 resistance level after rebounding from the 4020 low. A sustained break above 4400 would improve the bullish outlook and expose higher targets near 4600. However, a move back below 4280 could shift focus towards the yearly lows around 4080 and 4020.

XAU/USD Daily Chart