- The US dollar was negatively affected by yesterday's announcement by the US Federal Reserve, which helped the gold price to rebound upward towards the $1982 resistance level, which is stable around it at the time of writing.
- After pausing a series of recent US interest rate hikes last month, the Federal Reserve announced on Wednesday its widely expected decision to resume raising interest rates.
- The Fed said it decided to raise the target range for the federal funds rate by 25 basis points to 5.25 to 5.50 percent. And with the increase, the midpoint of the target range is the highest since early 2001.
The decision to raise interest rates came as the Federal Reserve noted that inflation remains high, while US economic activity is growing at a moderate pace and job gains have been solid in recent months.
With regard to the prospects for interest rates, the Fed said that “When determining the stability of additional policy that may be appropriate to return inflation to 2 percent over time, the committee will take into account the cumulative tightening of monetary policy, the slowdown in economic activity and inflation, and economic and financial developments.”
The US central bank added that it remains very alert to inflation risks and confirmed that it is firmly committed to returning inflation to its 2 percent target. The Fed's statement also acknowledged that tighter credit conditions for households and businesses are likely to affect economic activity, employment and inflation, but noted that the extent of these effects remains uncertain. The next monetary policy meeting is scheduled for September 19-20, with CME Group's FedWatch tool currently indicating a 79.1 percent chance that the Fed will leave interest rates unchanged.
In his post-meeting press conference, Fed Chairman Jerome Powell said the central bank could raise interest rates again in September or remain steady, indicating the central bank's plans for a meeting-by-meeting approach.
"We're going to go into each meeting, and as we go into each meeting, we're going to ask ourselves the same questions," Powell said. "So we haven't made any decisions about any future meetings, including the pace at which we look at hiking, but we will assess the need for further tightening that may be appropriate," he added.
Gold Technical Outlook
According to the performance on the daily chart below, the upward shift in the gold price continues, and as I mentioned before. There may be an opportunity for prices to move towards the psychological resistance level of $2000 an ounce, if the bulls succeed in capturing the $1978 and $1985 resistance levels, respectively.
The negative pressure on the US dollar, the increase in global geopolitical tensions, and the future of a global recession will push the price of gold toward stronger upward levels.
On the other hand, for the same period of time, the gold price moved towards the support levels of 1952 and 1938 dollars, respectively, as a threat to the current bullish path. Today, the gold market will be affected by the reaction to the announcements of global central banks today, the European Central Bank, and tomorrow, the Japanese Central Bank, a package of US economic data, led by the announcement of the GDP growth rate and the number of weekly jobless claims.
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