• Gold is bearish within its daily range following a hawkish hold at the Fed.
  • US Treasury yields and the USD surged in response to the Fed, weighing on investor appetite and the Yellow metal.

Gold is down by some 0.12% after falling from a high of $1,960.31oz to score a low of $1,939.75oz  after the Federal Reserve indicated that not one, but two more interest rate hikes may be in store as inflation remains sticky while the labour market has surprised with “extraordinary resilience.” This puts a strain on the yellow metal, especially as Fed Chair Jerome Powell said nearly all Fed officials expect more rate rises this year.

Gold price moved higher at the start of the US session after the easing of price pressures in Wednesday’s U.S. May PPI report was dovish for Fed policy. However, the hawkish hold at the Fed on Wednesday with Powell noting that even as officials have not decided what they will do at coming meetings, the July gathering is a “live meeting” that could bring another rate hike. Treasury yields and the USD surged in response, weighing on investor appetite.

Federal Open Market Commission statement 

key takeaways & Fed projections:

US interest rate decision actual 5.25% (forecast 5.25%, previous 5.25%).
The banking system is sound and resilient.
Fed officials see Fed funds rate at a median of 5.6% at end of 2023.
Fed policymakers see higher GDP growth in 2023, a lower unemployment rate and less progress on core inflation than they saw in March.
Holding rates steady allows for assessment of policy impact.
The extent of additional firming to hinge on the economy.
FOMC vote was unanimous.
Voted 11-0 for Fed funds rate action.
Fed will continue same pace of reducing treasury and MBS holdings.
Economic activity expanded at modest pace.
Job gains robust and unemployment remains low.
Fed median rate forecasts rise to 5.6% end-* 23, 4.6% end-* 24.
Fed officials see US GDP at 1.0% in 2023 and 1.1% in 2024.
Fed signals additional rate increases possible later this year.

All in all, this was a hawkish hold and consequently, Fed swaps no longer consider a 2023 rate cut likely, pressuring the Gold price lower. 

Gold technical analysis 

Gold price is trading heavily within a sideways daily range. Bears eye a break of the $1,930s to set the wheels to the downside in motion again. 

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