Gold Bounces Off Support, but Fed Hike Bets Cap Upside

The price of Gold (XAU/USD) has rebounded from its lowest level in over a month, reaching $4,284-$4,283 during the Asian session on Tuesday. However, despite this recovery, any significant gains seem elusive due to a bearish fundamental backdrop and upcoming events.

Investors are focusing on the two-day FOMC policy meeting, which is scheduled to begin later today. The US Federal Reserve's (Fed) decision, including updated economic projections and comments from Fed Chair Kevin Warsh, will have a significant impact on Gold prices and USD dynamics.

Inflation risks remain high due to higher energy prices, contributing to extended global bond selloffs. This has led to a surge in public and corporate borrowing, further tightening monetary policy expectations.

The ongoing Middle East crisis, including the missile attack by Iran-backed Houthis on a Saudi air base, continues to dampen hopes for diplomatic solutions, favoring USD bulls and capping any potential gains for Gold.