Gold pops and drops within $9 range in $1,700s around the Fed's statement

Gold moved higher and then back again within a $9 range on the Federal Reserve interest rate decision to leave rates on hold. At the time of writing, gold is trading at $1,705.40, -0.24% on the day, having travelled between a low of $1,698.16 and a high of $1,713.14. 

In a vote in favour of a policy that was unanimous, the FOMC on Wednesday announced that it left the benchmark interest rate unchanged within the target range of 0% - 0.25% as widely expected. The Fed also announced in the statement that rates will stay at the bottom until the economy is on track and is committed to using its full range of tools to achieve so.

Key notes

• Rates unchanged in a range of 0.00%-0.25%, as expected.
• Fed funds rate 2-year projection vs 1.6% prior.
• Fed funds rate 3-year projection vs 1.9% prior.
• Fed funds rate long-term projection vs 2.50% prior.
• Says will continue to offer large-scale overnight and term repo operations
• Fed says rates to stay at lower bound until economy has weathered recent events and on track to achieve unemployment and inflation goals.
• Interest on excess reserves unchanged at 0.10%.
• Public health crisis will weigh heavily on the economy, employment and inflation in the near term.
• Will monitor incoming information for economic outlook and public health along with global developments in setting policy.
• Will continue buying Treasuries, agencies and commercial MBS in amounts needed.
• Will continue to offer large-scale repos.
• Disruptions to economic activity in US and broad have significantly affected financial conditions.

The Fed's Chairman, Jerome Powell, will host a virtual press conference at 1830 GMT. 

The gold price struggled amid the risk-on tone in markets

Gold has been plateauing in April, struggling to keep above water in the $1,700's as equities have been in favour again, while nations, including some states in the US, seek to ease social distancing measures. The priority has started to shift from safeguarding against the spread of the virus to mitigating the long-term ramifications of isolation to both the population and the world economy. Markets, for now, are cheering a resilience from world leaders as the panic and anxiety fade and a sense of urgency prevails to get the world back to work, weighing on the price of gold. 

However, analysts at TD Securities argue that "while a sharp recovery in equity prices could constrain safe-haven demand for gold, ultimately," they argue, "that the monetary impulse will remain the primary driver of investment demand for the yellow metal."

The balance of risks remains to the upside for gold. That being said, while we expect some marginal CTA selling flow in response to the deteriorating momentum, we don't expect any significant changes in trend follower positioning.

Gold levels