Gold Analysis: The Federal Reserve's Stance Is Playing Against Gold

By RoboForex analysis Department

Yesterday, the US Federal Reserve made the decision to keep its interest rates unchanged. The chair of the US central bank, Jerome Powell, delivered a series of assertive statements.

He stated the Fed's intention to achieve a reduction in inflation to 2% and clarified that the current pause in the key interest rate hike cycle does not imply a departure from this policy in the future. This led to another increase in US government bond yields and a weakening of gold. These circumstances indicate fundamental factors favouring a potential short-term decline in gold prices. However, prominent institutional investors will continue to buy gold to mitigate losses from inflation, thereby sustaining demand for it.

Technical Analysis Of The XAU/USD Pair

On the D1 timeframe of the XAU/USD currency pair, there were no significant changes. There was an attempt yesterday to test the resistance level at 1948.98. As of the time of writing this analysis, gold has secured above the historical level of 1923.44. There is potential for further depreciation of the price of an ounce of gold down to the 1903.96 support level.

On the H1 timeframe, speculative intraday sales can be considered in the range of 1923.80 to 1903.96. Opportunities for buying may be considered only if the XAU/USD currency pair returns to the level of 1923.44, with a target set at 1948.50. However, this scenario currently appears unlikely. Movements within the broad channel mentioned above can be extremely volatile and demand a cautious approach to capital management for traders.

Should the level of 1903.96 be breached, a decline in the price of gold to the level of 1886.20 is likely. There is even a possibility that the quotes will reach new local lows, followed by the formation of a new extensive trading range in this timeframe.

Disclaimer

Any forecasts contained here are based on the author's particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein