FOMC and Powell support GOLD, bearish outlook still prevailsOANDA:XAUUSD Spot trading rose nearly 2% yesterday when the Federal Reserve cut interest rates by 25 basis points as market predicted, causing the US Dollar to plunge and giving gold a boost.
The Federal Reserve cut its benchmark interest rate by 25 basis points on Thursday, while policymakers noted a "broad deterioration" in the job market. Officials voted unanimously to lower the federal funds rate to a range of 4.5%-4.75%. Federal Reserve Chairman Jerome Powell said Trump's presidential election victory will not directly affect monetary policy.
Federal Reserve interest rate cuts have put pressure on the US dollar and bond yields, while boosting the investment appeal of non-yielding gold.
FOMC content
In their monetary policy statement, officials acknowledged the economy is growing steadily despite slowing labor market conditions. They admitted inflation was close to the Fed's 2% target but still remained slightly high.
Fed policymakers also noted that the risks to achieving their dual mandates were “roughly balanced” but acknowledged uncertainty about the economic outlook.
The Federal Open Market Committee (FOMC) statement said: "The Committee believes that the risks to achieving its employment and inflation goals are balanced and that there is uncertainty about the economic outlook. The Committee concerned about the risk of achieving his dual mandate."
While policymakers noted “progress” in achieving the inflation target, they neglected to mention “becoming more confident that inflation can move steadily toward 2 percent.” sustainable”.
“Labour market conditions have generally eased since the beginning of this year, with the unemployment rate rising but remaining low,” the Fed statement said.
Powell said the election results would not affect decision-making in the short term and that there was flexibility in future policy direction.
At his post-FOMC press conference, Fed Chairman Jerome Powell avoided giving specific guidance on the future direction of interest rates, leaving room for flexibility at the December meeting and beyond. He emphasized that because the economy is strong, the Fed can take its time lowering interest rates. He acknowledged that even after Thursday's rate cut, policy remains restrained as officials aim to return interest rates to neutral levels.
Regarding the pace of interest rate cuts, Powell said if the labor market weakens or slows as it approaches neutrality, the Fed could accelerate the pace of interest rate cuts. However, he clarified that no final decision has been made yet.
Powell also said that in the short term, the presidential election results will not directly affect monetary policy.
General assessment
The Fed's 25 basis point cut boosted gold prices, on the other hand, Powell made very clear statements about the possibility and prospect of cutting interest rates and this is not beneficial for the US Dollar.
A very basic knowledge is that the US Dollar is controlled by the Fed and not under the power of the US President. Therefore, even in the event that Trump is elected and boosts the US Dollar, it will still be restrained by the policy of cutting interest rates. Only if Trump can completely eliminate the Fed will the US Dollar have nothing to show for it. prevent. Of course, this is without precedent, nor has any President been able to do this.
Analysis of technical prospects for OANDA:XAUUSD
Although gold has recovered strongly from the 0.618% Fibonacci level confluence with the lower edge of the channel, it is still in a downtrend with the price channel as the short-term trend.
On the other hand, gold's upward momentum has also been limited by the EMA21 level, and it still has enough bearish conditions when the Relative Strength Index is also showing signs of folding down from the 50 level area.
If gold falls below the 0.382% Fibonacci retracement level, it will have the potential to fall a bit further with a short-term target of around 2,684 USD rather than 2,668 USD.
However, in case gold moves above the EMA21 level it will tend to increase further to test the 0.236% Fibonacci level. Therefore, for open selling positions should be protected above EMA21 quite "strictly."
During the day, gold still has a bearish technical outlook with notable points listed as follows.
Support: 2,684 – 2,668USD
Resistance: 2,700 – 2,710USD
SELL XAUUSD PRICE 2736 - 2734⚡️
↠↠ Stoploss 2740
→Take Profit 1 2729
↨
→Take Profit 2 2724
BUY XAUUSD PRICE 2676 - 2678⚡️
↠↠ Stoploss 2672
→Take Profit 1 2683
↨
→Take Profit 2 2688
