Waller and Warsh Take Center Stage as Gold Waits for Fed's Next Move

Gold has settled into a narrow range above $4,000 after Brent crude retreated sharply this week, and market focus has shifted back to the Federal Reserve.

The easing of geopolitical risk has led to a rapid decrease in market anxiety. The suspension of military strikes between the US and Iran over the weekend saw Brent crude fall toward $80, erasing much of last week's war premium. Reports suggesting attacks resumed have had little impact on oil prices, which are struggling to sustain gains beyond $85.

Investors believe a renewed large-scale US offensive is unlikely, reducing concerns about energy prices triggering another significant inflation shock. As a result, both Gold and the Dollar have lost their clear directional impulses, leaving investors looking toward the Federal Reserve for guidance.

The FOMC meeting today is expected to be the next major catalyst in the market. The rate decision itself is unlikely to surprise, with markets expecting the Fed to leave the federal funds target range unchanged at 3.50-3.75%. However, investors are likely to judge the meeting by the distribution of votes, particularly those of influential policymakers such as Governor Christopher Waller and Chair Kevin Warsh.

A hawkish vote from these individuals would likely lift the Dollar and Treasury yields, putting pressure on Gold and increasing the risk of a downside break below its recent range. The key support level to watch is $3,942.23, with a break there targeting $3,804.32.