Gold prices surged on Wednesday after the US Fed scaled back its interest rate hikes, and gold was catapulted above $1,950 per ounce. If gold prices continue to increase, resistance may be encountered near the psychological level of $2,000 per ounce, while if gold prices decline, support may be found near $1,896 per ounce.
Gold prices have been predominantly directed by the dollar’s movement, as the competing gold typically loses appeal as an investment when the dollar rises. The dollar plummeted after the conclusion of the Fed meeting, with the dollar index touching 101.1. US Treasury yields retreated, with the US 10-year bond yielding below 3.40%
Increases in central banks’ interest rates put pressure on gold prices since assets yielding interest become a more appealing investment compared to gold as interest rates rise. After a series of aggressive rate hikes last year, the Fed has finally decided to relax its hawkish policy, boosting gold prices. The Federal Reserve raised interest rates by only 25 basis points at Wednesday’s meeting, bringing the benchmark interest rate to a target range of 4.50% to 4.75%.
Fed Chair Jerome Powell, at his press conference after the conclusion of the meeting, defended the central bank’s decision to relax its hawkish policy. Powell expressed his satisfaction with the ‘disinflation’ process but emphasized that ongoing rate hikes are appropriate since substantial evidence is necessary that inflation is under control.
US inflation seems to be cooling, providing support for gold prices. As the Fed and other central banks start to scale back their aggressive rate hiking, gold prices surge. Even though inflation rates remain high, signs of cooling price pressures have reduced rate hike expectations, providing support for gold prices. Gold prices are approaching overbought territory though, as they trade close to levels reached only after the crisis in Ukraine started last year.
The content provided in this material and/or any other material that this content is referred to, whether it comes from a third party or not, is for information purposes only and shall not be considered as a recommendation and/or investment advice and/or investment research and/or suggestions for performing any actions with financial products or instruments, or to participate in any particular trading strategy and cannot guarantee any profits. Past performance does not constitute a reliable indicator of future results. TopFX does not represent that the material provided here is accurate, current, or complete and therefore shouldn't be relied upon as such. This material does not take into account the reader's financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of TopFX, no reproduction or redistribution of the information provided herein is permitted.
Fill in the registration
form and click
Once you are in the client secure area, please proceed with uploading your Proof of Identity and Proof of Residence.
When your live account is approved, you can deposit funds and start trading on your chosen platform!
The website you are now viewing is operated by TopFX Global Ltd, an entity which is regulated by the Financial Services Authority (FSA) of Seychelles with a Securities Dealer License No SD037 that is not established in the European Union or regulated by an EU National Competent Authority.
If you wish to proceed please confirm that you understand and accept the risks associated with trading with a non-EU entity (as these risks are described in the Own Initiative Acknowledgment Form and that your decision will be at your own exclusive initiative and that no solicitation has been made by TopFX Global Ltd or any other entity within the Group.
Don't show this message again
These cookies fall under the following categories: essential, functional and marketing cookies. Marketing cookies may also include third-party cookies.