Gold Price Eyes $1,588.00 as the Federal Reserve Shifts to a More Dovish Stance
Gold price benefitted from yesterday’s FOMC statement. XAUUSD was initially consolidating between $1,569.00 to $1,572.00 prior to the release. However, gold price soon broke higher to $1,576.24 following the rate statement.
As expected the FOMC left rates unchanged within its target range of 1.50% – 1.75%. However, remarks on inflation running below the central bank’s 2% goal may have weighed on the US dollar. Additionally, as my colleague Eno Eteng reported, hints that the Federal Reserve may soon increase the size in its repo market operations fueled the rally on XAUUSD. Despite Fed Reserve Chairman Powell clarifying that they were “several months away from that,” it was interpreted that the central bank has shifted to a more dovish stance.
On the 4-hour time frame, we can see that support on the rising trend line held on XAUUSD. By connecting the lows of January 14, January 21, January 22, January 23, and January 24, gold price bounced off support around $1,565.00 in yesterday’s trading.
A closer look at the hourly time frame shows that a pull back to a shorter-term trend line could be possible on gold. If buyers take a break from pushing prices higher, gold price could find support at $1,576.20 where there may be trend line support (from connecting yesterday’s lows). If there are not enough bids at that price, we may even see XAUUSD fall to around $1,568.40 where the medium-term trend line seems to be.
On the other hand, a break of today’s Asian session highs around $1,580.75 could be a signal that gold price may soon re-test this week’s highs around $1,588.45.More content