Gold Price Forecast: XAU/USD rebounds sharply, shrugged-off Fed’s seven rate hikes announcement
|- XAU/USD has climbed near $1,930.00 after the announcement of the Fed's monetary policy.
- An aggressive hawkish stance from the Fed has failed to barricade gold bulls.
- The DXY has slipped near 98.40 in absence of an aggressive interest rate hike by the Fed.
Update: Gold (XAU/USD) prices have rebounded sharply after recording March’s fresh low of around $1,895.00. The precious metal has witnessed significant bids after the announcement of the interest rate decision by the Federal Reserve (Fed). The Fed has raised the interest rates by 25 basis points (bps) after a time period of three years. The decision is in-line with the street estimates; however, the bulletin of seven interest rate hikes in 2022 is beyond the predictions. A potential reversal in the gold prices indicates that the market participants have already priced in the worst-case scenarios from the Fed an interest rate hike was merely a formality to build significant long build-ups in the gold counter.
Post the announcement of the Fed’s monetary policy, investors will focus on headlines from the Russia-Ukraine war that will dictate the risk-impulse in the market.
Meanwhile, the US dollar index (DXY) is slipped sharply around 98.40 in absence of a 50 bps rate hike decision. The 10-year US Treasury yields have climbed near 2.19% on the announcement of seven rate hikes in 2022.
End of Update
Gold futures have spiked down to fresh two-week lows at $1,894 per troy ounce on Wednesday, following the Federal Reserve’s decision to hike interest rates by 25 basis points to 0.50%.
Gold little changed after Fed’s rate hike
The precious metal has been practically unaffected after the US Central Bank met market expectations, raising interest rates for the first time since 2018 and hinting towards more hikes over the coming months.
The Fed’s Committee has agreed to increase borrowing costs, forced by the highest inflation in the last four decades, and has warned about the perspectives of Ukraine’s invasion adding inflationary pressures and weighing on economic growth.
Beyond that, fed chair Jerome Powell has signaled a total of seven rate hikes in 2022 and has committed to set the plan to begin reducing its $9 trillion balance sheet over the coming meeting.
XAU/USD eroding support at $1,900 area
The yellow metal is now pushing against the support area at $1,900 following a nearly 9% sell-off from early-March highs beyond $2,000.
On the downside, a successful break below $1,900, would increase bearish pressure towards $1,875 (February 24 low) and 1,844 (February 15 low).
On the contrary, any bullish reaction should extend past $1,927 intra-day high before aiming to $1,0960 (March 11 lows) ahead of the $2,000 psychological level.
Technical levels to watch
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