Gold (XAU/USD) is consolidating above the $4,300 mark during the Asian session on Wednesday, struggling to build on its weekly gains but maintaining support due to optimism surrounding an interim US-Iran peace deal and a defensive US Dollar (USD) [1]. The commodity remains below the weekly swing high set on Monday and is trading beneath the technically significant 200-day Simple Moving Average (SMA), as traders await the outcome of the two-day FOMC policy meeting [1].
The US and Iran have agreed to a framework peace deal intended to end the war that began earlier in 2026. The initial memorandum of understanding (MOU) establishes a 60-day ceasefire, the reopening of the Strait of Hormuz, and sets the stage for technical negotiations over Iran's nuclear program. However, details about the agreement are scarce, with contradictory claims: US President Donald Trump stated the MoU will ensure Tehran never has a nuclear weapon, while Iran’s state media reported that detailed negotiations on nuclear issues have not yet begun [1]. Reports also suggest the agreement includes plans for a $300 billion private fund to trigger investment in Iran, but Trump dismissed this as "fakenews," keeping investors cautious [1].
Market participants are closely watching the US Federal Reserve's rate decision, which is expected later today. The Fed is widely anticipated to leave policy rates unchanged and may remove its easing bias due to stickier-than-expected inflation. The focus will be on updated economic projections, including the dot plot, and the post-meeting press conference by new Fed Chair Kevin Warsh for signals on future policy direction [1]. Traders have unwound worst-case inflationary scenarios and hawkish Fed expectations built up during the US-Iran conflict, but still assign a 60% probability of a 25 basis point rate hike in December. A dovish shift from the Fed is needed for further bearish bets on the USD and a sustained recovery in gold from its year-to-date low touched last week [1].
From a technical perspective, XAU/USD remains capped near the 38.2% Fibonacci retracement level of the April-June decline and below the 200-day SMA, keeping the broader tone bearish. The Relative Strength Index (RSI) is around 44 and the Moving Average Convergence Divergence (MACD) is slightly positive, suggesting stabilization but not a convincing bullish trend [1].
CONCLUSION
Gold is holding above $4,300, supported by US-Iran peace deal optimism and a cautious USD, but remains technically capped ahead of the Fed's rate decision. Investors are awaiting clarity from the Fed and further details on the peace deal before making aggressive market moves. The broader tone for gold remains bearish unless a dovish shift from the Fed materializes.