- Gold Price stages a solid rebound despite a hawkish 75 bps Fed rate hike.
- Fed’s resolve to fight inflation head-on helps lift the market mood.
- The USD struggles to find demand amid weaker yields, where is XAUUSD headed next?
Gold Price has entered a phase of consolidation so far this Thursday, following an impressive turnaround fuelled by Wednesday’s Fed decision. In an immediate reaction to the expected 75 bps rate hike announcement by the world’s most powerful central bank, the bright metal eased slightly, as the US dollar witnessed a knee-jerk spike. However, the longer-dated Treasury yields began tumbling while the Wall Street indices firmed up and triggered a sharp sell-off in the dollar, which lifted XAUUSD to fresh two-day highs of $1,842. The tide turned in favor of gold bulls after the Fed caved into the market expectations, signaling its strong resolve to combat inflation. This helped to calm the market nerves and 10-year yields quickly pulled back, sending the yellow metal sharply higher.
Looking ahead, if the sentiment around the yields continues to remain undermined, in the Fed’s aftermath, it could also keep the dollar broadly under pressure. Risk sentiment, however, is weakening and could likely revive the haven demand for the greenback, which in turn, may extend the retreat in gold price. Investors turn cautious ahead of the Bank of England (BOE) monetary policy decision, with the central bank widely expected to hike the key rates by 25 bps to 1.25%. Although a surprise 50 bps lift-off cannot be ruled out, as the BOE could take the lead from global central banks.
Gold Price Chart: Daily chart
The daily chart shows that the rebound in gold price remains capped below the critical horizontal 200-Daily Moving Average (DMA) at $1,842.
Bulls need acceptance above the latter on a daily closing basis to extend the recovery moment.
The next stop for bulls is seen at the mildly bullish 21 DMA at $1,847. Further up, the $1,850 psychological level will be challenged.
The 14-day Relative Strength Index (RSI) is turning lower below the midline, keeping sellers hopeful.
A sustained move below the $1,820 round figure will revive selling interests, calling for a towards Monday’s low of $1,810.
Strong support appears near $1,807-$1,805, which will be the level to beat for gold bears.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD consolidates gains below 1.0500 amid weaker US Dollar
EUR/USD holds gains below 1.0500 in European trading on Monday, having recovered from its two-year low of 1.0332. This rebound is due to a sell-off in the US Dollar and the US Treasury bond yields amid a US bond market rally. The focus shifts to German data and ECB-speak.
GBP/USD flirts with 2600 on the road to recovery
GBP/USD is trading close to 1.2600 early Monday, opening with a bullish gap at the start of a new week. A broad US Dollar decline alongside the US Treasury bond yields on appointment of a fiscal hawk Scott Bessent as the Treasury Chief helped the pair stage a solid comeback.
Gold: Is the tide turning in favor of XAU/USD sellers?
After witnessing intense volatility in Monday's opening hour, Gold's price is licking its wounds near $2,700. The bright metal enjoyed good two-way trades before sellers returned to the game after five straight days.
Elections, inflation, and the bond market
The Federal Reserve believes inflation is no longer a concern for consumers and the time has come to ensure the rate of change of prices does not decline any further.
Read more
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.