The recent release of the minutes from the US Federal Reserve meeting revealed a notably cautious tone among policymakers. This cautious sentiment aligns with previous calls for a restrained approach to monetary policy. The Fed indicated that more time is needed to ensure that US inflation is moving towards the 2% target, dampening market expectations of immediate interest rate cuts. As a result, the market now anticipates only one rate cut instead of the previously expected two, which is likely to keep the US interest rate at 5.5% for an extended period.
The price of gold fell to $2370.00 per troy ounce following the Fed’s announcement. Higher interest rates reduce the appeal of gold, which does not offer interest. This change in market expectations has contributed to the recent decline in gold prices. The technical analysis of XAU/USD suggests a downward trend, with potential further declines to 2322.00, followed by a rebound to 2385.35. The MACD indicator on the H4 chart supports this scenario, indicating a downward direction towards new lows.
On the H1 chart, a decline to 2385.00 has occurred, followed by a consolidation around this level. The recent breakout downwards opens the possibility of further decline to 2337.35, with a potential correction back to 2385.00 before a further drop towards 2321.45. The Stochastic oscillator confirms this scenario, signaling a potential rise before another decline. Investors should monitor these levels closely as market conditions evolve.
Gold prices have declined due to the Fed’s cautious stance on monetary policy and the expectation of prolonged high-interest rates. Technical indicators suggest further potential declines, with possible corrective rebounds. Investors should stay vigilant and adapt their strategies as market conditions change. The impact of the Fed’s decision will continue to shape the trajectory of gold prices in the coming weeks.