- Gold futures rose after the Federal Reserve left US interest rates unchanged and insisted that the next policy decision would not include a rate hike.
- There was little change in the price of the yellow metal ahead of the FOMC meeting.
The question now is: Will gold prices reclaim $2400?
According to gold trading platforms, gold prices rose to $2328 an ounce, recovering from this week's sell-off that pushed it to support at $2282 an ounce and is stabilizing around $2320 an ounce at the time of writing. Overall, gold prices have struggled to maintain any momentum but are still up 13% since the beginning of the year.
In the same performance, silver prices, gold's sister commodity, rose above $27 an ounce. Overall, the white metal was trading sideways ahead of the May FOMC meeting. Since the beginning of the year, silver prices have risen 13%.
According to the results of the economic calendar data, the US Federal Reserve left the benchmark federal funds interest rate at a range of 5.25% and 5.50%. This was not surprising. The biggest surprise that came out of the FOMC meeting was that the US central bank would reduce its balance sheet from $60 billion in Treasury bonds to $25 billion per month.
Moreover, financial markets rose strongly when Bank Chairman Jerome Powell told reporters that the next policy move was unlikely to be a hike in interest rates. Furthermore, he presented different economic scenarios that either justify lowering interest rates or keeping interest rates high for a longer period.
This is what stock markets wanted to hear and major benchmark indices rose after Powell's comment. Meanwhile, US Treasury yields, and the US dollar weakened after the FOMC statement and during the Powell conference. According to trading, the benchmark ten-year yield fell by 6.6 basis points to 4.618%. The two-year yield fell by 8.8 basis points to 4.958%, while the 30-year bond yield fell by 5.7 basis points to 4.732%.
The US Dollar Index (DXY), which is a measure of the dollar against a basket of other major currencies, fell. The DXY dollar index fell 0.4% to 105.80, from opening at 106.32. The index is still up 4.4% since the beginning of the year. As is known, the weaker US dollar rate is beneficial for goods priced in dollars because it makes it cheaper for foreign investors to buy them.
On the other hand, according to stock trading platforms, US stock indexes closed mixed on Wednesday as investors digested Fed Chair Powell's speech after the Fed kept borrowing costs on hold. In trading, the S&P 500 and Nasdaq trimmed earlier gains and each lost 0.3%, while the Dow Jones added 85 points.
During the press conference, the US Federal Reserve Chairman spoke in a less hawkish tone than expected, ruling out the possibility of raising US interest rates at the June meeting. Also, the central bank acknowledged that inflation remains high and does not expect that it would be appropriate to lower the target range until it gains greater confidence that inflation is moving sustainably towards 2%.
On the corporate side, shares of CVS and Starbucks declined, with a decline of 16.8% and 15.8%, respectively, after the pessimistic results.
Gold Price Forecast and Analysis Today:
Based on the performance on the daily chart above, the price of gold is in a phase of breaking the overall uptrend and gold will not abandon the upward trajectory without moving towards support levels of $2265 and $2220 per ounce, respectively. So far, I still prefer buying gold from all dip levels as global geopolitical tensions continue to persist and increase, in addition to central bank purchases of gold at record levels. Furthermore, Gold price may have the opportunity to move towards resistance at $2400 per ounce if US job numbers at the end of the week disappoint expectations for US dollar gains.
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