Gold is having a busy week, especially after the FOMC meeting yesterday. The dot plot showed only two rate cuts for 2025, which came as a surprise to the market. Combined with upward revisions to inflation and GDP, this was very bullish for the dollar index. The PCE for 2025 is now expected to be 2.5%, even higher than this year’s 2.4%, which might lead some to question the Fed’s commitment to fighting inflation. This likely explains the more conservative rate cut projections. 

(FOMC Projections) 

After the FOMC meeting, gold fell below 2600 in a sharp selloff, but the decline was short-lived. Following Trump’s post, the bipartisan stopgap bill discussions collapsed, raising the risk of a surprise government shutdown. This spiked XAUUSD to 2617. Later, the Bank of Japan held rates steady as expected but fell short of signaling a rate hike in January. Markets interpreted this as dovish, giving gold enough momentum to push toward the 2623 resistance. 

(XAUUSD 1-H Chart) 

The 2623 resistance is currently being tested. Following the hawkish FOMC, gold’s general direction is likely to shift to the downside in the short to medium term. The increased likelihood of a Gaza deal supports this scenario. However, the risk of a government shutdown could change this outlook. That said, the shutdown threat is likely a negotiation tactic by Trump, and cooler heads will likely prevail in the end. 

In this base scenario—with a hawkish Fed and a Gaza deal in the Middle East—upward moves are likely to present selling opportunities for gold. Two levels stand out as potential resistance points that could trigger downside moves. The first is 2623, which is being tested now. The second is the zone between the downtrend line and the 38.2% Fibonacci retracement level, around 2635–2639. 

However, a U.S. government shutdown could quickly alter this outlook, increasing risk during the holiday season ahead of Trump’s new term.