Gold’s surge by over 1.30% following the Federal Reserve’s decision to keep rates steady and signal at least three anticipated rate cuts for 2024. XAU/USD hit a three-day high and is eyeing further gains above $2000.
The Fed’s monetary policy statement confirmed the central bank’s decision to maintain the current interest rate range at 5.25% – 5.50% for the third consecutive meeting. The statement also acknowledged a cooling growth rate and moderated labor market, while inflation remains elevated but has cooled slightly.
The Fed’s commitment to remaining data-dependent for future monetary policy decisions was reiterated, along with continued efforts to reduce the balance sheet. Significant projections in the Summary of Economic Projections (SEP) indicated that the tightening cycle has ended, with most officials expecting the federal funds rate (FFR) to remain at 5.4% for the rest of the year. Additionally, the US central bank has signaled a potential 72 basis points easing in monetary policy by 2024.
Gold’s market reaction to the decision was seen in the hourly chart, where the price broke the $2000 mark and continued to trade volatile as traders await Fed Chair Jerome Powell’s press conference. Upside potential is identified at the October 27 high of around $2009.42, followed by the December 8 high at $2034, while downside risks are seen at $1972.60.
In addition to the technical levels, gold’s rally is reflective of the market’s reaction to the Fed’s dovish hold, with the easing of projected federal funds rate and the affirmation of the end of the tightening cycle contributing to the surge in XAU/USD. The market is closely awaiting Powell’s press conference for further insights and potential impact on gold prices.
