Gold Caught in Tight Spot as Fed Rate Decision Looms

The Federal Reserve's interest rate decision is crucial for gold prices as investors weigh in on the impact of falling oil prices. Lower energy costs have eased inflation concerns, reducing pressure on the Fed to tighten policy further.

This has created a supportive backdrop for gold, but its price remains under pressure due to the broader downtrend. The market's failure to sustain gains above $4,560 has left the sequence of lower highs unchanged since then.

Buyers have managed to lift prices off support, but the advance lost momentum before reaching the descending trendline. This suggests that market participants are still using rallies as opportunities to reduce exposure rather than establish new long positions.

The 35% probability of a July rate hike is being priced in by markets, leading investors to expect the Fed to remain on hold while awaiting clearer evidence of inflation trends.