• Gold Price stages a solid rebound despite a hawkish 75 bps Fed rate hike.  
  • Fed’s resolve to fight inflation head-on helps lift the market mood.
  • The USD struggles to find demand amid weaker yields, where is XAUUSD headed next?

Gold Price has entered a phase of consolidation so far this Thursday, following an impressive turnaround fuelled by Wednesday’s Fed decision. In an immediate reaction to the expected 75 bps rate hike announcement by the world’s most powerful central bank, the bright metal eased slightly, as the US dollar witnessed a knee-jerk spike. However, the longer-dated Treasury yields began tumbling while the Wall Street indices firmed up and triggered a sharp sell-off in the dollar, which lifted XAUUSD to fresh two-day highs of $1,842. The tide turned in favor of gold bulls after the Fed caved into the market expectations, signaling its strong resolve to combat inflation. This helped to calm the market nerves and 10-year yields quickly pulled back, sending the yellow metal sharply higher.

Looking ahead, if the sentiment around the yields continues to remain undermined, in the Fed’s aftermath, it could also keep the dollar broadly under pressure. Risk sentiment, however, is weakening and could likely revive the haven demand for the greenback, which in turn, may extend the retreat in gold price. Investors turn cautious ahead of the Bank of England (BOE) monetary policy decision, with the central bank widely expected to hike the key rates by 25 bps to 1.25%. Although a surprise 50 bps lift-off cannot be ruled out, as the BOE could take the lead from global central banks.

Gold Price Chart: Daily chart

The daily chart shows that the rebound in gold price remains capped below the critical horizontal 200-Daily Moving Average (DMA) at $1,842.

Bulls need acceptance above the latter on a daily closing basis to extend the recovery moment.

The next stop for bulls is seen at the mildly bullish 21 DMA at $1,847. Further up, the $1,850 psychological level will be challenged.

The 14-day Relative Strength Index (RSI) is turning lower below the midline, keeping sellers hopeful.

A sustained move below the $1,820 round figure will revive selling interests, calling for a towards Monday’s low of $1,810.

Strong support appears near $1,807-$1,805, which will be the level to beat for gold bears.

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