Gold turns Bitter after U.S Fed Speech, Strong Dollar
A stronger dollar and less trade tensions between the US and China helped gold prices continue their losses on Wednesday
Quick overview
- Gold prices continued to decline due to a stronger dollar and reduced trade tensions between the US and China.
- Fed Chair Jerome Powell's cautious comments about the US economy contributed to a further drop in spot gold prices.
- Despite recent bearish moves, gold's long-term technical structure remains bullish, with prices testing previous highs.
- The market may enter a consolidation phase as the ADX line flattens, indicating a potential decrease in volatility.
A stronger dollar and less trade tensions between the US and China helped gold prices continue their losses on Wednesday. Gold traders were not pleased with Fed Chair Jerome Powell’s cautious comments about the U.S economy.
Powell’s remarks caused spot gold, which had already dropped more than 1% before the meeting, to decline even more.
While US gold futures ended the day 1 percent lower at $3,391, it was down 1.8 percent to $3,368.42 an ounce. The US dollar gained 0.6 percent against a basket of major currencies, making bullion more expensive for buyers not exposed to the greenback dollar.
The FOMC unanimously decided to maintain interest rates at 4.25 percent to 4.5 percent, where they have been since December.
The FOMC stated, “uncertainty about the economic outlook has increased further.”. Jerome Powell, the chair of the Federal Reserve, reaffirmed that the central bank cannot take proactive measures when the future is uncertain.
Powell restated the Fed’s stance that it cannot be proactive and will “wait and see.”.
The precious metal’s technical structure has been bullish in recent months. The bullion asset on a long-term frame has been on a sharp upward trendline since early 2025, breaking through the psychological barrier of $3,000 per ounce.
Even though there have been some recent bearish moves, they haven’t been powerful enough to breach important support levels, and the price is testing previous highs once more. The bullish formation may get even stronger if buying pressure continues.
Although it has begun to flatten around 30, the ADX line is still above the neutral level of 20, which could indicate a decrease in market volatility and directional strength. If this flattening continues, it could indicate a consolidation or neutral phase in the short term.
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