On Wednesday, March 18, during Asian trading hours, the U.S. dollar index hovered near 99.601. Spot gold opened at $5,005.56 per ounce and is currently trading around $5,007.91. Gold prices remain largely stable as market participants monitor escalating tensions involving Iran while awaiting the upcoming Federal Reserve policy decision. The precious metal continues to experience wide fluctuations around the $5,000 mark.

Market sentiment is currently centered on the Federal Reserve's interest rate decision scheduled for early morning. According to the CME FedWatch Tool, there is a 98.9% probability that rates will remain unchanged, with a rare 1.1% expectation for a rate hike. This shift in expectations has made market sentiment more cautious, discouraging large-scale capital inflows and serving as the core reason for gold's consolidation. Key signals to watch in the decision include: whether the policy statement removes hints of "the next move being a rate cut," adjustments to the 2026 rate cut path in the dot plot, and Chair Powell's comments on inflation and geopolitical developments during the press conference.

A hawkish signal (emphasizing inflation risks and downplaying rate cut expectations) would likely strengthen the U.S. dollar, potentially pushing gold prices below the $4,970 support level toward $4,950. Conversely, a dovish signal (maintaining rate cut expectations and highlighting economic downside risks) could boost gold buying interest, driving prices above the $5,040 resistance to initiate a short-term rebound. Additionally, safe-haven demand from escalating Middle East tensions provides underlying support for gold, while the recent pullback in the U.S. dollar index indirectly alleviates downward pressure. These two factors, interacting with Fed policy expectations, intensify short-term volatility and increase the difficulty of breaking key levels, warranting cautious trading.

Technically, spot gold has maintained a consolidation pattern over Monday and Tuesday, primarily due to strong market caution ahead of this week's rate decision. Based on this week's price action, the trading approach remains consistent with previous analysis—treating movements within a channel before the early morning announcement. On the hourly chart, yesterday's dip to $4,973 near the weekly low was followed by a rebound to the $5,000 level. During the Asian session, focus should be on support at the channel's lower boundary. With gold currently oscillating near the key psychological level and lacking upward momentum, a strategy favoring short positions on rallies is advisable. If the European session shows a rebound, consider short positions near $5,020, targeting around $4,990.

Further analysis shows yesterday's price action featured a "dip and recovery" pattern with narrow-range fluctuations. After touching a low of $4,973 (close to the weekly low of $4,967), gold quickly rebounded, consolidating around $5,000 by the session's close. The daily candle formed a doji star, reflecting intense tug-of-war between bulls and bears and confirming market caution ahead of the Fed decision. Technical indicators show hourly moving averages converging, MACD green bars contracting, and the KDJ indicator showing signs of turning upward from oversold territory, suggesting bearish momentum is waning but bulls lack sufficient strength for a clear trend.

During the Asian session, two key levels warrant attention: On the support side, beyond the channel low, the $4,973-$4,970 range represents critical support tested multiple times recently, coinciding with the lower boundary of gold's ascending channel from previous lows. A successful test and hold above this range could justify light long positions with stops below $4,967 (under the weekly low), targeting $5,000-$5,010. However, positions should be kept short-term given the overall consolidation context. On the resistance side, apart from near-term pressure around $5,020, the $5,030-$5,044 zone marks yesterday's rebound high and the upper limit of recent fluctuations. If the European session fails to break $5,020, short strategies remain valid. An unexpected break and hold above $5,020 would require adjusting the approach, treating the upper range near $5,040 as resistance and avoiding impulsive long entries until bearish signals reappear.