FOMC Rate Decision: Will the Fed Trigger a Deeper Sell-Off in Gold?

The U.S. dollar is holding at a two-week high and Gold is slipping towards $4000 ahead of the Federal Reserve rate decision later today.

The Federal Reserve will announce its rate decision at 18:00 GMT and is widely expected to leave interest rates unchanged at 3.75%–4%. The market is pricing in a 90% probability of a hold, and with limited adjustments expected to the policy statement, the focus will be on the vote split and Fed Chair Kevin Warsh's press conference for clues about the probability of a December hike.

The meeting comes as CPI inflation in September rose to 3.7% year on year, while PPI was above 6% annually. However, core inflation, which removes more volatile items such as food and fuel, rose modestly to 2.6%. While the data strengthens the case for further tightening, policymakers have signalled a move away from back-to-back hikes in October, having raised rates by 25 basis points in September.

A hawkish hold is the base case, with the market focusing not on whether the Fed will tighten again, but on how much further rates could rise in the coming months. With no new projections or dot plot, the vote and Kevin Warsh's words and tone could drive the market reaction.

The vote split matters

The vote split, or how many, if any, of the 12 committee members dissent in favour of an immediate hike, could be telling as to how likely the Fed is to hike in December. No dissent could be interpreted by the market as a less hawkish hold, while dissent in favour of a hike could be seen as a more hawkish signal, making a December rate hike significantly more likely.

Will Kevin Warsh tee-up a December hike?

While Kevin Warsh generally shies away from forward guidance, he is expected to reiterate that additional tightening is warranted. The market is pricing in an 84% probability of a rate hike in December and two more rate hikes next year, with the first fully priced in for April. The Fed may look to reinforce expectations surrounding a December hike, which could lift the U.S. dollar and Treasury yields and drag on Gold.

Should the Fed avoid signalling an imminent rate hike, it could trigger a relief rally in risk assets and Gold and pull Treasury yields and the dollar lower. A more modest dollar rise and Gold decline could follow if the Fed delivers a hawkish hold with few surprises.

A strong hawkish hold could also see gold come under pressure. The precious metal trades lower ahead of the Fed meeting, giving back some of yesterday's 1% rise as higher oil prices stoke inflation fears.

Analysts have cut their 2026 gold price forecast for a second straight quarter due to high Treasury yields, a strong U.S. dollar and expectations that rates will remain higher for longer. However, gold prices are expected to recover in 2027.

Gold – technical analysis

Gold trades below its falling trendline, with both its 50 and 200 EMAs pointing to a bearish picture. The price recently broke down from $4,100, dropping to a low of $3,975, and has recovered slightly to above $4,030 at the time of writing. However, the bearish picture remains intact.

Sellers will look to take out the recent low and head towards $3,940, the 2026 low. Below here, $3,800 will come into focus.

Any recovery will first need to retake $4,100, where the falling trendline and horizontal resistance converge, before attention turns to $4,200, the 50 EMA and a key resistance level in October. A rise above here exposes the 200 EMA at $4,280, putting the price on a firmer footing and bringing $4,500 into focus.

With gold already trading below both its 50 and 200 EMAs, a hawkish Fed could reinforce the bearish technical picture through higher real yields and a stronger dollar. Conversely, if the Fed strikes a less hawkish tone than markets expect, a weaker dollar could help gold recover towards $4,100.