The financial world is preparing for a historic climax. On October 29, 2025, the Federal Reserve will announce its newest monetary policy. In fact, the Fed’s dual mandate is to keep inflation at 2% and achieve full employment. This mandate has a significant ripple effect across all markets—even gold. Analysts predict an ugly 9-3 vote split. Unanimous dissenter in waiting, we’re betting, is Governor Stephen Miran, who will want to cut 50 bps. At the same time, Board members Goolsbee and Musalem seem focused on keeping interest rates where they are.
Gold has taken a significant beating this week, down 3.5% week-to-date. Traders are trying to position for profit booking with an eye toward the Fed decision. The $4,000 level is an important line in the sand for gold purchasers, highlighting the high stakes in the game. The 61.8% Fibonacci level is at $3,721. This important support level amplifies the strangeness of what’s going on in today’s market.
Federal Reserve’s Monetary Policy Decision
The Federal Reserve’s next meeting is always a big deal, a make-or-break moment for the financial markets waiting to hear about interest rates. Legacy issues, such as inflationary pressures and employment levels largely take front and center stage of discussions today. Accordingly, the Fed’s decision could be felt most acutely across many sectors.
In the weeks leading up to this meeting, market analysts have been watching the voting patterns closely as all eyes shifted toward a likely split decision at best. At the BoC, a 10-2 or 11-1 vote in favor of a modest 25 basis points rate cut would imply dovish. This action would likely trigger greater price discovery in the gold market and other commodities.
As the Fed weighs its options, it must consider external factors such as ongoing geopolitical tensions and domestic economic indicators. Market participants remain cautious, particularly with the impending meeting between U.S. President Donald Trump and Chinese President Xi Jinping, which could influence trade relations and economic outlooks.
Market Impact on Gold Prices
In the weeks before the Federal Reserve’s announcement, gold prices have been on a rollercoaster, as they’ve reacted to fluctuating market sentiment surrounding the Fed’s decision. After a steep drop of 3.5% this week, traders are intently watching for signs of even a small uptick. Recent price action suggests profit-taking will be a near-term positive for gold. Many investors, both on Wall Street and in D.C. are seeking opportunities to act before the Fed’s announcement.
The $4,000 threshold is significant for prospective buyers. Should they manage to recapture this level, it may be a sign of renewed confidence in gold as a safe-haven asset. Furthermore, the 61.8% Fibonacci level at $3,721 may act as a support line if prices push lower again.
Investors are very worried about the technical indicators. The 14-day Relative Strength Index (RSI) has been loitering around the all-important 50 mark – an important indicator of bullish or bearish momentum. That suggests a time of uncertainty among traders and might be a harbinger of heightened swings in either direction after the Fed’s policy statement.
Broader Economic Context
Today, amidst a perfect storm of inflated economic activity and catastrophic uncertainty, the Federal Reserve’s decision is all the more important. The uncertainty created by the prospective meeting between President Trump and President Xi makes the ongoing situation even more complex for market participants. President Trump has been hopeful about negotiations with Xi, saying,
“I think we are going to have a great meeting with Xi.” – Donald Trump
These meetings are expected to focus on tariffs, including possible elimination or reduction of tariffs on imports from China related to the fentanyl supply chain. These kinds of changes would have immediate impact on domestic inflation and trade balances, thus having a second order effect on the Fed’s calculus.