Markets Digest Fed Decision Amid Policy and Geopolitical Crosscurrents

Key Takeaways:

*FOMC rate decision came in-line with the market expectation, leave the interest rate level unchanged. 

*Dollar gain on the back of hawkish stance from the Fed and pressuring the gold. 

Market Summary:

In yesterday’s session, investors focused squarely on the outcome of the critical FOMC meeting, where the Federal Reserve, as widely anticipated, voted to maintain interest rates unchanged. The U.S. central bank appears to be positioning itself cautiously in response to dual headwinds: the potential economic impact of Trump’s expansive tariff policies and ongoing geopolitical instability in the Middle East.

While Fed officials broadly anticipate that tariffs will eventually feed through to domestic price pressures, current employment and inflation data have yet to reflect these effects. This disconnect may heighten tensions between the Fed and the White House, particularly as President Trump continues to advocate for immediate rate cuts to stimulate the economy.

The dollar index strengthened notably following the meeting, breaking above the 99.00 level to reach its highest point in a week. This rally was fueled by what markets interpreted as relatively hawkish commentary from the Fed Chair during the post-meeting press conference.

Wall Street’s reaction was muted as investors weighed the Fed’s policy stance against mounting Middle East uncertainties. The dollar’s resurgence simultaneously pressured safe-haven assets, with gold sliding to a weekly low of 3362.60. Market participants remain particularly attuned to escalating Iran-Israel tensions, especially after Iran’s threatening rhetoric about launching an unprecedented attack – an event that could potentially trigger significant financial market volatility.

Technical Analysis 

Gold, H4: 

Gold prices have pulled back to their lowest level this week after reaching a two-month peak at $3,451. The precious metal found solid support above the critical 61.8% Fibonacci retracement level at $3,367 in the previous session, indicating its broader bullish trend remains intact.

The near-term outlook presents two clear technical scenarios:

• A decisive breakout above the current consolidation range at $3,400 would signal a bullish trend reversal and potential resumption of the upward trajectory
• Failure to hold above the $3,367 support level could indicate weakening momentum and shift sentiment bearish

Technical indicators show mixed signals:

• The RSI has retreated from overbought territory to mid-level, showing reduced buying pressure
• The MACD appears poised to cross below the zero line, suggesting bearish momentum may be developing

Resistance level: 3400.00, 3483.00
Support level: 3300.00, 3225.00