Gold Price Plummets Ahead of Fed Decision Amid Hawkish Rate Hike Expectations

The gold price has taken a hit ahead of the Fed's decision on Wednesday. Spot gold is down 0.4% to $4,282.49, while U.S. gold futures have slipped 0.7% to $4,323.30. Oil prices above $100 a barrel are adding pressure on inflation, which in turn is pushing bond yields up and the dollar higher.

Economists expect the Fed to raise interest rates by at least a quarter point, with a Reuters poll showing an 85% chance of a hike. This has traders pricing in four increases through July 2027, putting gold bulls in a tough spot.

The technical picture is also bearish, with gold's lower highs since early September indicating a potential move toward $4,200 if the Fed delivers a hawkish message and gold fails to reclaim $4,360. A rate hike can pressure gold due to higher interest rates and Treasury yields increasing the opportunity cost of holding non-yielding bullion.

However, if the hike is already priced in and the Fed delivers a softer outlook, the gold price could recover toward $4,400 and $4,480.