Gold Slips to $1,661 as Fed Hikes Interest Rate by 75 bps

Gold prices sank 1% on Thursday as the US currency strengthened and the Federal Reserve signaled more significant rate hikes, reducing the attraction of the zero-yielding commodity. Gold fell 0.8% to $1,660.55 per ounce. Gold futures in the United States were down 0.4% at $1,668.20.

The FOMC’s (Federal Open Market Committee) stage setup suggests much more room for real rates to rise, which is not a very gold-friendly climate.

A decisive break of the $1,650 barrier could swiftly take gold towards $1,600 and possibly below it. On Wednesday, the Fed raised interest rates by 75 basis points for the third time in a row, with Chair Jerome Powell stating that lowering inflation was their “overarching focus.”

The Fed expects its policy rate to rise faster and higher than projected, even though the economy is faltering and unemployment is growing. “The hawkish Fed estimates represent a bleak view for the economy, and this could eventually cause a revival of gold’s safe-haven position,” said Edward Moya, senior analyst at OANDA.

Even though yellow metal GOLD is regarded as a hedge against inflation and economic uncertainty, investors may prefer alternative interest-yielding assets in a high-interest-rate environment. The dollar surged to a fresh two-decade high, making gold more expensive for foreign currency buyers.

Gold Technical Outlook

Yesterday, the gold price showed mixed trades near the $1,660 level. The XAU/USD closed the daily candlestick below the bearish channel’s resistance, to begin today with a strong decline and break the symmetrical triangle’s support line and settle below it, keeping the primary bearish trend situation valid and active for the forthcoming days. It’s waiting to head towards $1,644.00 accompanied by $1,630.00 levels as the next negative targets.

The EMA 50 continues to support the projected bearish wave, informing you that a close below $1,680.00 is required to continue the expected slide. Today’s trading range is likely to be between $1,635.00 support and $1,675.00 resistance.

Today’s projected trend is bearish.