- Gold price oscillates in the $2030 - $2050 range following the Fed's decision to hold interest rates steady.
- Fed officials voted unanimously and emphasized the need to see inflation lowering toward 2%.
- Investors now turn to Fed Chairman Jerome Powell for further insights, with US Treasury yields and the Dollar Index responding to the latest Fed update.
Gold price trims earlier gains and retreats after the US Federal Reserve decided to keep rates unchanged while pushing back against speculation of rate cuts. At the time of writing, XAU/USD trades volatile within the $2030 - $2050 area as market participants await Fed Chairman Jerome Powell’s decision.
XAU/USD trades volatile following Fed’s decision
In its monetary policy meeting, Fed officials voted unanimously to keep rates unchanged. They noted that it would be appropriate to reduce rates until there is greater confidence that inflation is sustainably moving toward its 2% goal. The Fed added that risks of achieving the Fed dual mandate are moving into better balance and emphasized that the committee will remain “highly attentive” to inflation risks.
Regarding the reduction of the balance sheet, it would remain as previously described while tightening restrictions on all Fed staff with access to confidential FOMC information.
After the data, the US 10-year Treasury note yield spiked to 4% before retreating somewhat towards 3.97%. At the same time, the US Dollar Index (DXY) aimed toward 103.50 before getting back to 103.35.
XAU/USD Reaction to Fed’s Decision
Gold dived toward the $2040 area after the Fed’s decision, though it remains seesawing, as mentioned in the first paragraph, capped at $2050. Although XAU/USD hovers at around $2040, downside risks remain, as the Fed’s statement was perceived as hawkish, though the Fed’s Chair Jerome Powell would cross the wires at around 19:30 GMT.
Key resistance lies at the daily high at $2055.98, followed by $2090, ahead of $2100. On the flip side, support emerges at $2032.14, the day’s low, followed by the January 25 low of $2009.66.
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 treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
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.