Federal Reserve hawkish hike sent Gold price lower

FXStreet Team FXStreet

The United States (US) Federal Open Market Committee (FOMC) announced a 25 basis-point (bps) interest rate hike following its two-day meeting, pushing the US Dollar (USD) firmly up against most major rivals. With this decision, the Funds Target Range (FFTR) stands floating in the 3.75%–4.00% range.

The accompanying statement showed that policymakers believe inflation remains elevated, although economic activity in the country expands at a solid pace. The US central bank also released the Summary of Economic Projections (SEP), which showed that 12 of 18 officials see one more 25-basis-point rate hike this year; four see two hikes; two see no more hikes.

XAU/USD Technical Outlook

Gold price retreated after trading as high as $4,366, now hovering around $4,328.92. The metal hovers around the 100-day Simple Moving Average (SMA) at $4,326.68, but remains capped well below the 20-day SMA at $4,445.34 and the 200-day SMA at $4,540.18, maintaining a neutral-to-bearish tone. Momentum is soft, with the 14-day Relative Strength Index (RSI) hovering around 47 and the 14-period Momentum indicator in negative territory, suggesting waning upside pressure while price consolidates under the broader moving-average ceiling.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Economic Indicator

Fed Interest Rate Decision

The Federal Reserve (Fed) deliberates on monetary policy and makes a decision on interest rates at eight pre-scheduled meetings per year. It has two mandates: to keep inflation at 2%, and to maintain full employment. Its main tool for achieving this is by setting interest rates – both at which it lends to banks and banks lend to each other. If it decides to hike rates, the US Dollar (USD) tends to strengthen as it attracts more foreign capital inflows. If it cuts rates, it tends to weaken the USD as capital drains out to countries offering higher returns. If rates are left unchanged, attention turns to the tone of the Federal Open Market Committee (FOMC) statement, and whether it is hawkish (expectant of higher future interest rates), or dovish (expectant of lower future rates).

AUD/USD hangs close to monthly lows, still defends 0.7100 ahead of Fed decision

AUD/USD retains its negative bias for the third straight day, defending 0.7100 while trading close to a monthly low in Wednesday's Asian session on Wednesday. The US Dollar stands firm near a two-week high as the anticipated Fed rate hike and oil-driven inflation fears continue to push US bond yields to a multi-year high. Furthermore, escalating Middle East tensions benefit the safe-haven buck and weigh on the risk-sensitive Aussie.

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