Gold Spikes to $1,930 – US Fed Hikes Interest Rate to 0.50%
Gold prices have risen sharply since hitting a new low of around $1,895.00. Following the Federal Reserve's interest rate decision
Gold prices have risen sharply since hitting a new low of around $1,895.00. Following the Federal Reserve’s interest rate decision announcement, the precious metal has seen significant bids (Fed). After three years, the Fed raised interest rates by 25 basis points (bps). The decision is consistent with market expectations; however, the announcement of seven interest rate hikes in 2022 exceeds expectations.
A potential reversal in GOLD prices indicates that market participants have already priced in the worst-case scenarios from the Fed, implying that an interest rate hike was merely a formality to build significant long positions in the gold counter.
Following the Fed’s monetary policy announcement, investors will be focused on headlines from the Russia-Ukraine conflict, which will dictate the market’s risk-impulse.
Meanwhile, in the absence of a 50 basis point rate hike decision, the US dollar index (DXY) has fallen sharply to around 98.40. Following the announcement of seven rate hikes in 2022, 10-year US Treasury yields have risen to near 2.19 percent. On Wednesday, gold futures fell to new two-week lows of $1,894 per troy ounce, amid the US Federal Reserve’s decision to hike interest rates by 25 basis points to 0.50 percent.
The price of gold did not change significantly following the Fed’s rate hike. The precious metal has remained virtually unchanged after the US Federal Reserve met market expectations by hiking interest rates for the first time since 2018 and hinting at further increases in the coming months.
The Fed’s Committee has agreed to raise borrowing costs in response to the highest inflation in four decades and has expressed concern about the possibility of Ukraine’s invasion adding inflationary pressures and weighing on economic growth.
Aside from that, Fed Chair Jerome Powell has signaled seven rate hikes in 2022 and has committed to establishing a plan to begin reducing the Fed’s $9 trillion balance sheet at the upcoming meeting.
Gold Technical Outlook
Following a nearly 9% sell-off from early-March highs above $2,000, the yellow metal is now pushing against the $1,900 support area. On the downside, a successful break below $1,900 would increase bearish pressure towards $1,875 and 1,844.
On the other hand, any bullish reaction should extend past the $1,927 intra-day high before aiming for $1,960 ahead of the $2,000 psychological level. Good luck!
- Check out our free forex signals
- Follow the top economic events on FX Leaders economic calendar
- Trade better, discover more Forex Trading Strategies
- Open a FREE Trading Account
Related Articles
Comments
Sidebar rates
Related Posts
Save
Join 350 000+ traders receiving Free Trading Signals
Alerts
Rates
Calendar
Signals