"Breakdown or Rebound at $4,021?"...Gold Price, Warning on the Eve of Fed Rate Decision

▲ Gold, Bear Market/AI Generated Image

Gold prices are closely clinging to the $4,021 support level ahead of the U.S. Federal Reserve's interest rate decision. Despite massive purchases by central banks, a strong dollar and outflows from gold ETFs are increasing the risk of further declines.

According to FX Leaders, a foreign exchange and financial news outlet, on July 29 (local time), spot gold traded at $4,029 per ounce. COMEX gold futures for August fell 0.2% to $4,028. The futures market reflected a 70% probability of the Federal Open Market Committee (FOMC) freezing interest rates and a 30% probability of a 0.25 percentage point increase. The possibility of an additional rate hike by September was tallied at 76%.

The dollar index remained at a one-month high, and U.S. Treasury yields also put pressure on gold prices. Gold does not pay interest, so its attractiveness as a holding decreases when interest rates rise. The market is focusing more on how Federal Reserve Chairman Kevin Warsh will explain future inflation and monetary policy direction than on the rate decision itself.

According to the World Gold Council (WGC), central banks worldwide net purchased 244 tons of gold in the first quarter. In May, they bought an additional 41 tons, with Poland and China purchasing 18 tons and 10 tons, respectively. 89% of foreign exchange reserve managers predicted that global central bank gold holdings would increase over the next year. 45% expected their own central banks to continue buying gold. Military tensions in the Middle East also supported demand for safe-haven assets.

Investor funds moved in the opposite direction. Real gold-backed ETFs saw net outflows of $8.9 billion in June alone. North American gold ETFs lost $5.5 billion, and European ETFs saw an outflow of $818 million. In contrast, Asian gold ETFs attracted a record $12 billion in the first half of 2026. This dynamic shows central bank and Asian investor buying defending against outflows from Western funds.

Technically, gold prices are testing the $4,021 support level within a descending triangle. The Relative Strength Index (RSI) remained in bearish territory at 39. To strengthen a rebound, gold needs to break above the 50-period exponential moving averages at $4,058 and $4,080. Subsequent resistance levels are $4,132 and the 200-period exponential moving average at $4,137. If $4,021 breaks, a downside path could open up to $3,964, followed by $3,914.

[Article Summary]

-Gold prices showed limited movement at $4,029 per ounce ahead of the U.S. Federal Reserve's interest rate decision.

-Central banks worldwide net purchased 244 tons of gold in the first quarter, but $8.9 billion flowed out of gold ETFs in June.

-If the key support level of $4,021 breaks, gold prices could fall to $3,964 and $3,914.

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