The price of gold XAU/USD is attempting to rebound higher with gains, and therefore the resistance level reached $1937 per ounce and is settling around the level of $1928 per ounce at the time of writing the analysis. The gains come with a temporary halt to US dollar gains ahead of the most important event, the US Federal Reserve Bank's policy decisions later today.
Before the event, US stocks fell, and yields rose as Wall Street markets waited for the latest Federal Reserve Board decision on US interest rates. Accordingly, the S&P 500 index fell by 9.58 points, or 0.2%, to 4443.95 points. The Dow Jones Industrial Average fell 106.57, or 0.3%, to 34517.73, and the Nasdaq Composite Index lost 0.2%, to 13678.19. Stocks in general have been fluctuating for weeks due to uncertainty over whether the Fed is done raising interest rates that have rocked the market.
By raising the main US interest rate to the highest level in more than two decades, the Federal Reserve Bank helped calm inflation from its peak reached last year but at the expense of damaging investment prices and harming some parts of the US economy.
The Federal Reserve began its final meeting on interest rates on Tuesday and is due to make an announcement today. The prevailing expectations are that the Federal Reserve Bank will announce no change in interest rates. More focus will be placed on updated forecasts from Fed officials about where they see interest rates heading in the coming years. In this regard, traders are divided on whether the Fed may raise interest rates again this year, but they largely expect the Fed to start cutting US interest rates next year. Such reductions can act as stimulants for the financial markets, giving a boost to all types of investments.
Optimists say inflation has fallen enough to enable the Federal Reserve to cut interest rates significantly next year, while the economy continues to thrive on a strong labor market. Others say the Fed may need to keep interest rates higher for longer than investors expect to bring inflation down to its 2% target, while the risk of recession still looms.
The soft recession, where inflation returns to the Federal Reserve Bank's target without the American economy suffering a painful recession, "is still possible, but unlikely from our point of view." And there remains the danger that the Fed may misread the temporary slowdown in inflation as having done its job, which could lead to a cycle reminiscent of the late 1960s where inflation accelerates again, the Fed raises interest rates more, and recession occurs at the end of eventually.
Gold price expectations today:
- According to the performance on the daily chart below, the price of gold XAU/USD is still in the phase of breaking the downward trend.
- The attempts will not succeed without moving towards the resistance levels of 1945 and 1970 dollars respectively.
- This may happen today if the US Federal Reserve abandons the tightening tone of its policy.
On the contrary, if the US dollar received a positive wound from today's announcement, the price of gold XAU/USD may be exposed to strong selling operations, with which it is not excluded that the move towards the support of $1900 per ounce again. I still prefer buying gold from every falling level, no matter what the price of the dollar is, gold has motivational factors represented by global geopolitical tensions and fears of a global economic recession.
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