Gold Price Analysis: XAU/USD reverses sharply from weekly highs, falls to $1910
|- Gold spikes with USD slide then reverses sharply as the greenback erased losses.
- FOMC makes changes to its policy strategy, adopting “average inflation target”.
Gold prices are down for the day after a wild ride following the Federal Reserve updates to its statement on goals and monetary policy strategy. Initially, XAU/USD jumped to $1,976/oz hitting the highest level in a week but it then pulled back falling to as low as $1,909. As of writing, the yellow metal is hovering around $1,925 down $25 for the day.
The moves in gold followed the greenback that during Fed’s Powell presentation tumbled but then, more than recovered. The DXY fell to weekly lows at 92.44 and more recently printed a fresh daily high at 93.30.
The only constant has been equity prices in the US that not only did not pullback but printed fresh highs. The Dow Jones is up 260 points or 0.92% while the Nasdaq gains 0.29%.
The Fed announced a shift in its approach to monetary policy. The central bank adopted an average inflation target of 2%, allowing inflation to run “moderately” higher for some time. It also mentioned if it will focus on shortfalls of maximum employment instead of “deviations”. The message from the Fed is that it will let inflation run higher (moderate) in times of economic prosperity.
Levels to watch
Despite soaring volatility, XAU/USD still continues to trade sideways with a bearish bias in the short-term, unable to consolidate above $1,950 and supported by the $1,900 figure.
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