Gold Prices Drop after Hawkish FOMC Meeting
Gold Prices Fell Early Thursday in Asia, Extending after Falling the Most in Two Months
Investors continued to take a more hawkish-than-expected stance by the US Federal Reserve
Gold continues its short term downtrend
The yellow metal fell 1.5% during the previous session after the Fed announced its latest policy decision. Speaking earlier, Fed Chair Jerome Powell did not increase interest rates at every meeting in a bid to rein in high inflation rates.
The decline brings down gold’s 2022 gains to date, with investors’ expectations rising to continue in real interest rates even as expectations of a rate hike grow. Due to the Fed’s hawkish stance that defies expectations, a safe haven can still be taken by geopolitical risks including Russia’s potential invasion of Ukraine.
Gold futures were down 0.89% at $11,813.45/oz by 1:19 p.m. ET, according to Investing.com data. The US dollar, which normally moves against gold, was up 0.29% at 96,677.
After Fed Decision, Investors waiting for South African Reserve Bank’s Policy Decision
Fed decision Goldman Sachs Group Inc raised its 12-month gold outlook to $2,150 an ounce from $2,000, above expectations for slower US growth, a rebound in emerging markets excluding China, and faster inflation.
“This combination of slower growth and higher inflation will generate investment demand for gold, which we view as a defensive inflation hedge,” analysts, including Mikhail Sprogis, said in a note on Thursday.
Investors now await the South African Reserve Bank’s policy decision, which will be announced later today. The Bank of England and the Reserve Bank of Australia will also deliver their respective policy decisions next week.
In other precious metals, silver, platinum, and palladium all fall.
XAUUSD (Gold) – Technical Analysis
$XAUUSD or gold falling to its daily trendline support. If gold closes bearish below 1813.800 then we can see a down continuation to 1805.000 support level on gold.
WHAT ZFX THINKS…
After a hawkish and bullish sentiment on FOMC, DXY looks to be clearly bullish and strong. We might see a downwards continuation of all major pairs against the USD such as EURUSD or GBPUSD.
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