- The return of the US Central Bank’s emphasis on the future of raising interest rates, despite its recent decision to maintain US interest rates, helped the US dollar achieve its gains.
- At the same time stopped the gold price’s attempts to rebound upwards, after moving toward the $1935 resistance yesterday.
- It retreated to the $1915 support level per ounce, before settling around the $1922 level at the time of writing the analysis, waiting for anything new.
Despite the recent recession, gold prices experienced a strong performance in the first half of 2023 with annual gains of more than 5%, outperforming many other asset classes and commodities.
Fed officials reached a weak agreement to pause US interest rate hikes at their meeting in June, but they are all committed to raising interest rates again later this month in a bid to continue combating stubborn inflation. Minutes of the Fed's June 13-14 meeting show that while almost all officials considered it "appropriate or acceptable" to keep interest rates unchanged in the target range of 5 percent to 5.25 percent, some would support an Increase a quarter point instead.
The minutes also showed that the vast majority of policymakers — "nearly all of them" — agreed that further tightening was likely to be needed this year. That, along with pointing out the importance of post-meeting contact to make clear the officials' intentions, provided ample evidence that the Fed likely didn't. The readings paint a picture of an increasingly divided committee trying to navigate the pace and intensity of policy moves as rates are now in a range most economists see as constraining. Ahead of the meeting, a significant minority of policymakers had warned that inflation would not fall as quickly as they expected and expressed support for further action.
Fed Governor Jerome Powell has repeatedly stressed that the decision was unanimous in several public appearances that followed the meeting and said most officials see at least two more increases as necessary if not more.
"A strong majority of the participants on the committee expect that it would be appropriate to raise interest rates two or more times by the end of the year," Powell said at a conference in Madrid hosted by the Bank of Spain last week. Inflation pressures continue to rise, and the process of bringing inflation back to 2 percent still has a long way to go.
Overall, Powell's messages have helped narrow the gap between Fed officials' estimates - which call for two more rate hikes this year - and market expectations of a tightening. Investors now estimate the odds of a July rally at 85 percent, compared with 62 percent immediately after the June meeting.
But some at the Fed have expressed reservations about how much tightening is needed.
Gold Technical Outlook
According to the performance on the daily chart below, the gold price still tends to decline, and the opportunity for prices to move toward the $1885 support level is available if it tests $1900 an ounce, which is the closest to it now. Thinking about buying gold back from the $1,885 support and less than it will be possible, as global geopolitical tensions still provide, on the other hand, a positive impetus for the gold market.
On the other hand, and for the same time period, the gold price will have bullish strength in the event of a move toward the $1970 resistance level. US interest, which directly affects the US dollar and, accordingly, the price of gold.
Ready to trade today’s Gold prediction? Here’s a list of some of the best XAU/USD brokers to check out.