Gold giving up the days gains as US dollar firms on Powell’s Pressser

• Gold has been pressured during the press conference following the Fed interest rate decision.
• XAU/USD is into negative territory and on the verge of testing key hourly support.

Gold prices, XAU/USD, are trading at $1,953 between a range of $1,949.91 and $1,973.78, down some 0.02% on the day so far where the Federal Open Market Committee has been the main focus. 

The interest rate decision and statement were released without any changes to the benchmark interest rate unchanged.

The target range stands at 0.00% – 0.25% while the interest rate on excess reserves unchanged at 0.10%.

Key takeaways from the statement

FOMC statement says it would be prepared to adjust if risks emerge that would impede goals

The Fed is forecasting 2.0% inflation in 2023 and 4.0% unemployment.

2023 Fed fund dot plot shows four dots above zero, median unchanged.

The Fed Chair Jerome Powell is now hosting a press conference where the next bout of volatility could come from which is so far giving the USD a little boost. 

The DXY hit a high of 93.28 during the presser. 

There are upside technical arguments for the dollar that could weigh on the bullish trajectory of gold for which many expect to see in coming weeks. 

DXY daily chart

 We have argued that there is a supportive positioning slate in gold, with few weak hands remaining, as prices held fairly strong in relative terms despite elevated correlations across assets in the post-pandemic world,

analysts at TD Securities argued. 

Indeed, the Fed has given a dovish signal through the wording on QE, the extension of the dot plot through 2023, and the Chairman’s press conference has been somewhat balanced towards the dovish side. 

Over time, this will open up the door to an extension in the average maturity of Treasury purchases. In this context, we argue that the balance of risks is tilted towards a breakout higher.

Gold levels

Bears are taking on the bullish commitments at key hourly support:

From a longer-term analysis, gold is expected to move higher following consolidation and a 50% mean reversion retracement of the weekly rally.