Gold rose during the North American session on Wednesday after minutes from the Federal Reserve’s April meeting showed most officials supported preparing for a rate rise. XAU/USD traded at $4,530, up 1%.
The minutes said policy tightening may be needed if inflation stays above the 2% goal. They also noted that many officials would have preferred removing wording that implied an easing bias.
Fed Minutes And Gold Momentum
This was the second meeting in a row where more officials said higher borrowing costs could be appropriate if prices remain high. The minutes said Middle East conflict could affect the balance of risks and the policy path.
Money markets priced a 50% chance of a rate rise at the December meeting, based on Prime Terminal data. Gold still gained as the US Dollar weakened and US Treasury yields fell.
The US Dollar Index was down 0.19% at 99.11 after touching 98.96, a two-day low. The 10-year Treasury yield was 4.576%, down 9 basis points.
Comments from US President Donald Trump and Iran’s Revolutionary Guard Corps added to geopolitical focus. Traders are also watching Initial Jobless Claims, housing data, and S&P Global Flash PMIs.
Key Levels And Market Focus
Technically, resistance sits above $4,600, with levels at $4,628, $4,690, $4,700, and $4,787. Support is $4,500, then $4,464, $4,400, and $4,340; central banks added 1,136 tonnes of gold worth about $70 billion in 2022.
We remember looking at a similar situation in 2025, when hawkish Federal Reserve minutes about a potential rate hike failed to stop gold’s momentum. Today on May 21, 2026, we see a comparable dynamic where underlying support for the metal seems to outweigh concerns over monetary policy. This pattern suggests traders should look beyond the Fed’s immediate statements for gold’s primary drivers.
Last year, the rally was helped by a falling dollar, with the DXY index trading around 99. Today, the dollar is a key headwind, with the DXY holding much stronger near 104.6. However, while 10-year Treasury yields were near 4.57% then, they are trading in a similar range now at about 4.45%, which continues to limit the opportunity cost of holding non-yielding gold.
The big difference from 2025 is market expectation for interest rates. Back then, markets were pricing in a 50% chance of a rate hike, whereas CME FedWatch Tool data today shows a nearly 70% probability of at least one rate cut by the end of this year. This fundamental shift toward expected easing provides a strong tailwind for gold that was not present last year.
Geopolitical factors and central bank demand, which were notable drivers in 2025, remain firmly in place. Persistent global conflicts continue to boost gold’s safe-haven appeal, and recent reports from the World Gold Council confirm that central bank purchases remained robust through the first quarter of 2026. This consistent buying creates a solid floor for prices.
For derivatives traders, this suggests a strategy of buying call options to target a move toward the $5,000 level in the coming weeks. Using call spreads would be a prudent way to finance these positions and reduce costs, given the risk of a stronger dollar limiting upside potential. This approach allows us to participate in a potential rally while defining our risk.
Conversely, we must watch the $4,800 level as key support. A break below this could indicate the strong dollar is winning the argument, invalidating the bullish thesis. In that case, purchasing put options would be a necessary hedge to protect against a slide back towards the $4,700 mark seen earlier this year.
