Fed Decision to Break Gold's Five-Week Range

The Federal Reserve's decision on Wednesday afternoon could break gold's five-week range, according to FXEmpire. The market is waiting for Jerome Warsh's tone on inflation, which will determine whether gold gets room to extend or faces selling pressure.

If Warsh leans into the energy story and calls the inflation risk persistent, yields and the dollar are expected to catch a bid, and gold could pay the price immediately. On the other hand, if he holds without adding new pressure on the inflation side, buyers who have been defending the $4,000 area may get room to work.

The market is also watching for Thursday's PCE number, which can either confirm or undercut Warsh's comments. A hot reading after a hawkish Fed could lock in selling for the rest of the week, while a soft number would be the strongest fundamental support gold can get next week.