Gold Price Vulnerable as Markets Turn Focus to Fed Rate Decision

Gold prices are showing signs of vulnerability as traders shift their attention to the upcoming Federal Reserve meeting. The precious metal is trading in a tight range near key support levels, reflecting market uncertainty over the central bank's next policy move.

The Fed's interest rate decision, scheduled for later this month, will be the primary driver of near-term gold price direction. Markets are currently pricing in a high probability of a rate cut, but any hawkish surprise could strengthen the US dollar and push gold lower.

Gold tends to struggle when real interest rates remain elevated, as the opportunity cost of holding non-yielding assets increases. Analysts note that gold has already priced in significant dovish expectations, and if the Fed delivers a cut but signals caution on further easing, gold could face a 'sell the news' reaction.

From a technical perspective, XAU/USD is testing a critical support zone near $2,300-$2,320. A break below this level could open the door for a deeper correction toward $2,250. On the upside, resistance is seen at $2,380 and then $2,400, where the 50-day moving average currently sits.

The Relative Strength Index (RSI) has dipped below 50, indicating bearish momentum in the short term. Volume data shows increased selling pressure during US trading hours, suggesting institutional positioning ahead of the Fed decision.