Gold prices soared after the Fed rate decision

[Polakandil]

The Fed's decision at yesterday's meeting finally held interest rates unchanged at 5.25-5.50% for the fifth time in a row. The Fed also emphasized that it would wait for more supporting data before cutting its benchmark interest rate.
As predicted by the market, it seems that the market response has caused financial markets to become more volatile. Gold, which was previously stagnant in the $2150 range, surged yesterday and even formed a new all-time high at $2222.77 before finally rebounding to $2203.
In the crypto market, most cryptocurrencies also experienced increases, Bitcoin jumped more than 9%, Ethereum rose 11%, and Solana rose 12%.

The soaring gold price seems to reflect the market looking for alternative safe haven assets amidst economic uncertainty. While the price of gold itself is influenced by several factors, as reported by the FXOpen blog article, several factors that can influence the value of gold are

• Inflation Expectations and US Currency: Anticipation of rising inflation and a weakening US dollar, triggered by large fiscal and monetary stimulus, may lift the XAU market.
• Demand Recovery in China and India: A gradual increase in consumer demand in key markets such as China and India, coupled with new investments, could support a rise in gold prices.
• Geopolitical Tensions: As global geopolitical conditions remain tense, the appeal of the yellow metal as a hedging instrument may increase, thereby potentially supporting its price.
• Cost Opportunity: As the opportunity cost of holding gold decreases, the attractiveness of gold among investors will remain, thereby potentially contributing to the growth of the XAUUSD exchange rate.

The price of gold is now around $2201, a correction after the price spike occurred. Technically, based on MA 50, it is estimated that bullish sentiment for gold in the long term is possible. In fact, several forecasting sites have predicted that the price of gold could reach levels above $3,000 in the next five years, such as Gov Capital predicting that the price of gold will soar to $3,368. in mid-2025.

Gold D1 Ticktrader

 

[Polakandil]

Gold prices continued their decline on Thursday after falling on Wednesday following the Fed's FOMC meeting minutes. Gold prices yesterday fell to a low of $2326 after a short-term correction.

The minutes of the FOMC meeting held Wednesday which was attended by many Fed officials maintained high interest rates in the range of 5% - 5.50%. According to Fed officials, inflationary pressures persist despite it's cooling

The impact of high interest rates hampers demand for gold because cash and bonds are more attractive to investors.

The Fed even discussed the possibility of raising interest rates to tackle inflation. Analysts expect the Fed to keep interest rates high at least until September

 

[VasilTodorov]

Gold prices continued their decline on Thursday after falling on Wednesday following the Fed's FOMC meeting minutes. Gold prices yesterday fell to a low of $2326 after a short-term correction.

The minutes of the FOMC meeting held Wednesday which was attended by many Fed officials maintained high interest rates in the range of 5% - 5.50%. According to Fed officials, inflationary pressures persist despite it's cooling

The impact of high interest rates hampers demand for gold because cash and bonds are more attractive to investors.

The Fed even discussed the possibility of raising interest rates to tackle inflation. Analysts expect the Fed to keep interest rates high at least until September

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I did see some news saying Russia and Britain have issues and problems and china is getting in more conflict with the other part i cant remember the name of that country. if these are true, the possibility of war and bad situation makes gold get more power and price.

 

[Polakandil]

I did see some news saying Russia and Britain have issues and problems and china is getting in more conflict with the other part i cant remember the name of that country. if these are true, the possibility of war and bad situation makes gold get more power and price.

Rumors of concerns about World War 3 have recently become more prominent because the geopolitical map seems to be divided into Western and Eastern blocs, and several countries such as BRICS have also reportedly abandoned the USD which allows for sharper de-dollarization. Usually, when the USD weakens, the price of gold will rise, and vice versa. However gold volatility is very high, and trading without risk management on gold can lead to big losses

 

[borzy]

Gold prices could soar after a Fed rate decision if the decision leads to a weaker U.S. dollar or signals economic uncertainty. Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold, making it more attractive. Additionally, gold is often seen as a safe-haven asset, so dovish Fed policies or economic instability can drive investors towards gold, pushing its prices higher.

 

[Polakandil]

The price of gold is often correlated with the USD, when the USD strengthens then gold prices may fall, if the USD weakens then the price of gold may rise, so the Fed's policies that can affect the value of gold are of great concern to traders, as happened last week after the NFP data showed the actual value which gave impetus to the strengthening of the USD currency, the price of gold fell sharply. However, gold prices are very volatile, trading gold on the CFD Market must use a stop loss.

 

[Polakandil]

Gold prices fell because the actual Flash Manufacturing PMI and Flash Services PMI data were higher than forecast

Before yesterday's drop, the price of gold soared to $2,368, the increase in gold prices was amidst market optimism regarding the Fed's expectations of lowering interest rates and geopolitical risks in the Middle East. Lebanon's Hezbollah will fight all out with Israel.

However, hopes of a further increase in gold prices were dashed after Flash Manufacturing PMI and Flash Services PMI data showed values that were greater than expected. Flash Manufacturing PMI rose to 51.7 from a previous revision of 51.3 and forecast of 51.0. And the Flash Services PMI rose to 55.1 from a previously revised 54.8 with a forecast of 53.4. After the PMI data was released, gold prices fell from $2368 to $2330 in just three hours.

 

[Polakandil]

The price of gold is currently still above the $2300 range, after falling last week, on Monday the price now shows that the price of gold is in a consolidation phase after experiencing a fairly sharp decline. Referring to RSI in H1. Within a certain period, the price is already in the oversold zone, this allows for a reversal signal. However, on D1 the RSI shows level 47, which means the price of gold is still in a downtrend.

News that may be of interest to investors today in the CAD currency is Governor Macklem's speech, a hawkish speech may be good for the CAD. Apart from BOC Governor Tiff Macklem's speech, there was also the release of Canadian inflation data, although it does not have a direct impact on gold, it does not rule out the possibility that it could affect gold demand in Canada.

Although prices fall in the short term, gold in the long term is still supported by strong central bank purchases, according to a survey conducted by the WGC central bank will increase its holdings in 2024. In addition, geopolitical risk turmoil in the Middle East between Israel and Lebanon may make people consider buying gold as a safe-haven asset.

 

[Polakandil]

Gold prices are still trading above the $2300 level and moving in a range. Gold prices failed to continue the rally after reaching the price level of $2337, the price then fell and reached a low level of $2315. The $2300 price level could be gold's current psychological level. The failure to increase gold prices may be caused by investors who are still waiting for US economic data and speeches by Fed officials. PCE data due Friday may have a high impact on gold.

This is because Gold is often correlated with the USD, San Francisco Fed President Mary Daly said that "recent inflation numbers are more encouraging, but it is difficult to know whether we are on a path to sustained price stability. Fed officials' speeches could provide some clues as to the Fed's next policy direction.

Another reason for the decline in gold prices is higher than expected US CB Consumer Confidence data which is also expected to trigger a strengthening of the USD and impact oil demand. The actual CB Consumer Confidence data was 100.4 with a previous revision of 101.3 and an estimate of 100.0. This is a survey of approximately 3,000 households that asks respondents to assess the relative level of current and future economic conditions including labor availability, business conditions, and the overall economic situation.

Today investors are focused on US New Home Sales data which is one of the main indicators of the economy because new home sales can trigger wide ripple effects. The revised data was previously recorded at 634k with an estimate of 636k, if the actual data is greater than the estimate, this is good for the USD and may cause gold to fall. On the other hand, if the actual data is smaller than estimates, this might encourage gold to rise.

 

[Polakandil]

Yesterday the price of gold drew a bullish candle with a long body, it formed a higher high which reflects that after the price fell to a low of $2296 then buyers appeared trying to dominate the bullish market.

The increase in gold prices was amidst a mix of US economic data released on Thursday such as GDP whose actual data was the same as the forecast of 1.4%, unemployment claims show actual data of 233k with a forecast of 236k and previous 239k.

Now the price of gold is falling, drawing a bearish candlestick on H1 ahead of the PCE data which will be released today, where this data is the inflation data that the Fed likes most in determining the direction of interest rate policy. Currently, the Fed is still maintaining high interest rates above 5% which is an obstacle for gold to continue its rise because high interest rates encourage investors to choose to buy bonds rather than gold which does not provide yields.

 

[Polakandil]

Today investors may be waiting for important news to be released from Fed Chair Powell's speech. Investors will usually see whether the speech is hawkish or dovish. The price of gold continues. A Hawkish speech may make the USD strengthen while a dovish speech may allow the USD to weaken.

Yesterday's gold price formed a bullish candlestick with shadows above and below the candle. Prices may still move in a range because the length of the high and low candlesticks is still balanced with the previous candlestick.

Now gold price is consolidating near the middle band line with an Open $2326.19 High of $2328.42 Low $2318.50 and Close $2331.7. The Bollinger band draws a flat channel indicating the price may move within a certain range.

Yesterday US economic data showed the Final Manufacturing PMI showed an actual value of 51.6 from the estimate of 51.7 and previous data of 51.7. ISM Manufacturing PMI data showed an actual value of 48.5 from a forecast of 49.2 with the previous 48.7. Meanwhile, ISM Manufacturing Price data shows an actual value of 52.1 from a forecast of 55.8 with a previous of 57.0. Construction Spending fell from the previous 0.3% to just -0.1% from 0.3% forecast.

This data shows that there was a contraction in the US economy which caused the price of gold to rise even though it ultimately fell again. The Fed may still consider deeper interest rate cuts. Now that interest rates are still high, investors prefer to buy bonds that produce yields rather than buying gold. High interest rates slow down the economy, to suppress inflation, central banks need to control the money supply.

 

[Polakandil]

It seems that gold prices are still trading in a range, looking at the hourly timeframe, the room for gold price movement ranges between the swing high of $2338 near the upper band line and the swing low of $2219 near the lower band line. A flat Bollinger Band channel indicates a sideways market with moderate volatility.

This range market movement may have been triggered by the Fed's interest rates which are currently still high despite hopes of cutting interest rates, but this is likely to only happen at the end of the year.

Yesterday Powell's speech still reflected a hawkish attitude which predicted that the Fed would only cut interest rates once in 2024, which is expected to be in September.

The high interest rates set by the Fed aim to contain the rate of inflation, and will cut interest rates if inflation falls to the target of 2%. Currently, Fed officials are still taking a pro and con stance, so a reduction in interest rates is unlikely to occur shortly even though economic indicators are cooler.

Today's important news that concerns traders is the Non-Farm Employment Change and ADP Unemployment Claims which have the potential to move gold prices. ADP data is forecast at 163k with a revision of previous data of 152k. Large differences between actual and forecast data can provide a market response that causes volatility to increase. Meanwhile, unemployment claims data is estimated at -13 billion with a revision to the previous data of -1.0 billion. If the actual data is smaller than the forecast, perhaps the USD will strengthen.

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[Polakandil]

Yesterday's gold price soared drawing a bullish candlestick with a long body and a small shadow at the top of the candle. This reflects a strong rally in gold after breaking the middle band line and reaching the upper band line.
Now the price is moving near the upper band line, this could be a resistance zone, a break above could lead the price to move even higher to get new resistance.

Yesterday's gold rally was quite astonishing with gains reaching a high of $2364 before dropping back to around $2355.

Powell's speech may be the one that gets investors' response so that gold prices soar.

However, other factors also support gold, and various geopolitical factors indicate a bullish background for the precious metal.

In the US, a Supreme Court decision granting former US President Donald Trump partial immunity from prosecution for the insurrection after his defeat in 2020 could add new concerns to global security if he wins over incumbent President Joe Biden.

Yesterday's economic data, ADP Non-Farm Employment Change, and Unemployment Claims, showed actual data that did not support the USD. actual ADP Non-Farm Employment Change data was 150k from a forecast of 163k with a revision of the previous data of 157k. Meanwhile, the actual Unemployment claims data of 238k was greater than the forecast of 234k and the previous data revision of 234k.

BRICS countries challenging the dominance of the US Dollar with Gold as the most realistic substitute in international trade for countries that do not want or do not have access to the Dollar-denominated market is increasing the demand for gold as a central bank reserve.

 

[Polakandil]

Gold prices yesterday moved slightly in the range of $2350-$2362 after rallying the previous day waiting for NFP data in the current countdown.

NFP is considered high impact news which is expected to have a direct impact on gold because it is related to the US economy. This is one of the Fed's cornerstones in interest rate policy.

According to Forexfactory, the NFP forecast was 191k with previously revised data of 272k. In theory, if the actual data is greater than the forecast, then the USD could strengthen, conversely, if the actual data is smaller than the forecast, then there is the potential for the USD to weaken.
In the H1 timeframe, we can see Bollinger band forming Bollinger band squeeze that indicates the market in low volatility. If eventually Bollinger band squeeze breakout usually will be followed by an extreme move.

Meanwhile, in the D1 timeframe, the price is now moving near the upper band line which draws a flat channel, this indicates the price is in a market range. However, today's NFP news could cause the structure to change, if there is a breakout of the upper band, it is hoped that gold will reach a higher range of $277.

Even though the current price is still sideways, gold's potential is supported by geopolitical risks and central banks buying more gold as reserves, especially in BRICS member countries which are already anti-dollar.

 

[Polakandil]

Gold hit a new all-time high yesterday at $2469. $XAUUSD price strong rally drawing a long body bullish candlestick with almost no shadow.
Gold is a good asset. We see the price of gold soaring above the upper band line. Bollinger bands expand further away from the mean value reflecting high volatility.

Even though yesterday the price of gold fell because US retail sales data was higher than expectations, it seemed only temporary and became a stepping stone for gold to jump higher. As eagerly awaited retail sales data shows the actual value of 0.4% from the expected 0.1%, this reflects an increase in purchasing power so that market confidence in the Fed cutting interest rates increases. According to CME's FedWatch Tool, the chance of a 25 basis point (bp) rate cut is 93.3%.

Apart from that, the political situation in the US ahead of the election became a matter of public concern after Trump's shooting, if the situation worsens it might have a good impact on gold because investors are concerned that they prefer gold as a safe-haven asset.

 

[Polakandil]

Even though it fell due to profit-taking, the gold price is still moving above the MA 50 line, indicating that the market trend is allowing the trend to continue. This can be seen in the H1 timeframe where the RSI is in the neutral zone.

Today there is US Job data news that might influence gold prices, although technically gold prices may be bullish if the actual Unemployment Claims data is expected to be 229k. If actual data is smaller than expected by a large difference the USD may strengthen and pressure gold to fall lower.