Gold stayed near the low end of its recent trading range on Wednesday. Investors waited for the Federal Reserve’s rate decision. They also looked for new signals on the path of U.S. monetary policy.

The price of gold has faced pressure from a stronger dollar. Higher Treasury yields have also weighed on it. Many now expect the Fed to raise borrowing costs. Spot gold fell below $4,300 an ounce earlier this week after trading between roughly $4,270 and $4,450 in recent sessions.

The Federal Open Market Committee will announce its decision after a two-day meeting. Financial markets expect the central bank to raise its benchmark interest rate by a quarter percentage point.

A Reuters poll found that 85% of economists expected the Fed to lift its target range to 3.75%–4.00%. Markets had expected the Fed to leave rates unchanged earlier in September, but stronger economic data changed that view.

Gold prices may already reflect the immediate decision. Investors will focus on the Fed’s policy statement, economic forecasts, and Chair Kevin Warsh’s press conference. They want clues on whether another increase could follow.

Why the Fed Decision Matters for Gold

Gold does not pay interest. When interest rates and bond yields rise, investors may favor assets that provide regular returns, such as government debt.

Higher rates can also support the U.S. dollar. Because global markets price gold in dollars, a stronger U.S. dollar makes gold cost more for buyers.

This is true for buyers using pesos, euros, yen, and other currencies.

These conditions have limited the price of gold despite continued demand for safe-haven assets.

“Gold is stuck in a range because a rate hike is more likely,” said Daniel Pavilonis, a senior market strategist at StoneX.

The relationship is not always direct. Gold can still rise when interest rates are high. This can happen when investors fear war, heavy government debt, or financial system stress. For now, however, expectations for tighter Fed policy have carried more weight.

Inflation Data Changed Market Expectations

Recent inflation measures strengthened the case for higher interest rates in the United States.

The Consumer Price Index, or CPI, rose 0.4% in August. It rose 0.1% in July, according to the U.S. Bureau of Labor Statistics. Consumer prices increased 3.4% from a year earlier.

Core inflation, which excludes food and energy, rose 0.3% during the month and 2.4% over the previous 12 months. Economists monitor core inflation because it can show if price pressures have spread across more goods and services.

The CPI measures changes in the prices consumers pay for everyday goods and services. Still, the report is one of the main ones the Fed uses to assess inflation and progress toward price stability.

Rising oil prices have added another challenge. Higher energy costs can raise transportation and production expenses, which companies may pass on to consumers through higher prices.

A stronger-than-expected U.S. employment report also showed that the labor market remained resilient. The economy added 162,000 jobs in August, while the unemployment rate held at 4.1%, according to government data.

Together, the employment and inflation reports encouraged traders to expect higher rates for a longer period.

What Could Break Gold’s Current Range?

A rate increase alone may not be enough to push gold decisively beyond its recent price levels. The market will also assess the Fed’s language about future policy.

If the Fed signals that it may need more increases, Treasury yields and the dollar could rise further. That outcome could place additional pressure on gold and bring support near $4,270 back into focus.

A break below that area could signal that sellers remain in control. It may also shift attention toward lower support levels established earlier in the year.

Gold could move in the opposite direction if the Fed takes a more cautious approach. Policymakers could raise rates while avoiding a firm commitment to further action. They could also emphasize risks to employment, economic growth or financial stability.

Such a message could lower bond yields, weaken the dollar and help gold recover toward the upper end of its range. A sustained move above $4,450 could improve short-term momentum. However, traders may wait for confirmation before calling it a broader breakout.

“The price swings are smaller than usual. The market had already priced in a 70% chance of an interest-rate hike. This is what independent metals trader Tai Wong told Reuters after the latest CPI report.” He added that recent price action suggested gold was finding a short-term base following its retreat.

Safe-Haven Demand Continues to Support Gold

Gold continues to receive support from geopolitical uncertainty, particularly the conflict involving Iran and disruptions across major Middle East energy routes.

Oil prices above $100 a barrel have increased concerns about rising prices and slower global growth. Those risks can support gold as a safe-haven asset, even when higher interest rates create pressure.

Central-bank buying also remains an important source of long-term demand. Many central banks have increased their gold holdings to diversify reserves and reduce their dependence on individual currencies.

That demand has helped limit gold’s losses. But it has not been strong enough to offset the recent rise in the dollar. It also has not offset higher Treasury yields.

Gold has also struggled to repeat the rapid gains recorded earlier in the year. The metal hit a record high above $5,500 an ounce in January. Then, expectations of tighter monetary policy triggered a broad retreat.

Fed Guidance Could Matter More Than the Hike

Markets now appear prepared for a quarter-point rate increase. That makes the Fed’s guidance the more uncertain part of Wednesday’s announcement.

Investors will examine the central bank’s updated projections for interest rates, inflation, employment and economic growth. They will also listen for any indication that policymakers expect rising energy prices to keep inflation above target.

A firm commitment to restoring stable prices could raise expectations for another rate hike before year-end. A more balanced message could ease those expectations and give gold room to recover.

The Fed will release its decision on Wednesday, followed by Warsh’s press conference. Gold traders will watch the dollar, Treasury yields and the metal’s key price levels for signs that its recent range has finally broken.