XAUUSD Faces a Critical Week as Fed Decision Meets Daily Downtrend
Gold is trading near 4,090 after bouncing from the recent lows, but the bigger picture on the daily chart has not changed yet. The descending trendline is still controlling price action, and this week's Federal Reserve policy decision could become the catalyst for the next major move. My current bias remains bearish while price stays below the daily trendline and the 4,211 major resistance. That bias changes only if buyers manage to reclaim and hold above resistance with a strong daily close.
I spent some time studying the daily chart before the London session, and one thing immediately stood out to me. Every recovery attempt has been rejected before reaching the previous swing high. That tells me sellers are still defending higher prices. I have seen this type of structure many times before, especially ahead of major Fed events where retail traders become overconfident before volatility explodes.
Daily Chart Still Favors Sellers Until Resistance Breaks
Looking only at the chart, the market is respecting a clean descending trendline that has been in place for several months. Price is now trading below both the trendline and the major resistance zone. As long as this structure remains intact, every rally deserves extra caution instead of immediate buying.
The first level I am watching is 4,211, which aligns with the major daily resistance marked on the chart. Above that sits the next resistance near 4,387. If buyers manage to close above 4,211 on the daily timeframe after the Fed meeting, the market could extend toward the second resistance. Until that happens, rallies may simply become liquidity for institutional sellers rather than the beginning of a fresh uptrend.
The support around 3,943 remains equally important. A decisive daily close below this zone would strengthen the existing bearish structure and could invite another wave of selling pressure. I am not treating that as a guarantee, only as the scenario that currently has the higher probability based on the chart.
Ahead of the Fed meeting, traders should also remember that strong economic data often supports the U.S. dollar. If the central bank maintains a hawkish tone or economic numbers continue to surprise on the upside, gold could struggle to sustain any short-term recovery. On the other hand, a softer policy message could weaken the dollar enough for buyers to challenge resistance. This is why confirmation matters more than prediction.
Another detail caught my attention this morning. Retail sentiment appears to be shifting every time price posts a small green candle, yet the broader structure has not confirmed a bullish reversal. That kind of emotional buying often creates a classic retail trap, especially during major news weeks. I would rather wait for confirmation than chase an early breakout.
If you want to understand why macro events create these sharp gold swings, read my previous guide on gold reactions to CPI, NFP and FOMC. The same institutional logic could play an important role again this week.
Fed Decision Could Decide Whether Bears Stay in Control
The technical structure currently leans to the downside, but this is one of those weeks where fundamentals can completely change short-term momentum. The Federal Reserve is widely expected to keep interest rates unchanged, yet traders will focus much more on the statement, economic projections, and Chair Powell's comments than the rate decision itself.
If policymakers continue to signal that inflation risks remain elevated and interest rates may stay higher for longer, the U.S. dollar could strengthen again. A stronger dollar usually creates additional pressure on gold because the metal becomes more expensive for buyers using other currencies. That scenario would support the existing bearish structure already visible on the daily chart.
Still, markets rarely move in a straight line. Even during strong downtrends, institutional traders often allow price to rally into liquidity before another selling wave begins. That is why I never assume every green candle means the trend has changed. Patience usually pays more than chasing momentum during major news weeks.
One thing I have learned over the years is that the New York session often delivers the real direction after the initial volatility settles. The first move immediately after a Fed announcement is not always the true move. Liquidity sweeps and fake breakouts become common as large players clear retail stop losses before committing to the next directional leg.
If you missed the earlier bearish structure, my previous analysis on gold bearish trend confirmation explains why trend structure remains more important than short-term candles. I also recommend reviewing the gold trading checklist before opening any position during high-impact news events.
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Based on the current daily chart, I personally remain cautiously bearish. The trendline is still intact, lower highs are still visible, and sellers continue to defend the upper structure. That alone keeps me from becoming aggressively bullish before confirmation appears.
At the same time, I will not blindly sell into support. The Fed meeting has the power to create violent two-way volatility, and the first breakout after the announcement can easily become a fake move. My approach is simple: if price rejects the 4,211 resistance and the U.S. dollar strengthens after the Fed communication, I will continue respecting the bearish trend. If the market produces a convincing daily close above resistance with strong buying volume, I will immediately reassess my bias instead of fighting the new structure.
Trading is not about proving a prediction right. It is about following price after confirmation. Right now, my opinion favors the downside, but the chart—not my opinion—will make the final decision.
For traders monitoring broader policy expectations, the latest Federal Reserve communications remain one of the most important references. You can follow official policy updates through the FOMC meeting calendar to understand how upcoming decisions may influence gold and the U.S. dollar.
Current Bias: Bearish while price remains below 4,211. A confirmed daily breakout above resistance would weaken this outlook and shift attention toward the next resistance near 4,387. Until then, I believe disciplined risk management is more important than trying to predict every candle.
