Gold Price Forecast: XAU/USD drifts from record highs, $3.660 support on focus

• Gold retreats from $3,700 record highs but remains steady above $3,660 so far.
• Investors' cautiousness ahead of the Fed's decision is providing some support to the US Dollar.
• XAU/USD: A sustained break below $3,650 would give fresh hopes for bears.

Gold is trading lower on Wednesday, weighed by generalised USD strength, as investors cut short Dollar positions ahead of the Fed's decision. The Precious metal turned lower from the $3,700 record high, with bears contained above the $3.6660 area so far.

The Federal Reserve is widely expected to cut rates by 25 basis points to the 4.0%-4.25% range, but traders are growing wary that the bank's stance may disappoint the market's dovish expectations. Such an outcome would snap the risk rally and fuel a deeper USD recovery.

Weak US employment data has boosted hopes of Fed cuts over the following months. Futures markets are broadly pricing a quarter point in each monetary policy meeting this year and some more in the first months of 2026, a view that is highly unlikely to be confirmed by Fed Chair Jerome Powell.

Technical Analysis: Gold has reached heavily overbought levels

XAU/USD appreciated by about 2% in the last three days and beyond 11% in the last four weeks. Technical indicators reveal an overstretched condition, particularly visible on the daily chart (in the image), which should act as a warning for buyers.

The pair has not given any clear signal of a bearish correction, but a confirmation below the $3.660-3,650 support area, which encloses the highs of September 10,11, and 12, would form an evening star candle pattern, a standard signal of trend shifts.

Further down, the September 11 low, at $3,615, would come to the focus, ahead of the September 3 high and September 8 low, at $3,580. To the upside, immediate resistance is at $3,700 level ahead of the 161.8% extension of last week's rally, near $3,740.