Investor caution prevails in the gold market as the Federal Reserve’s policy decision approaches. This situation affects both the spot gold price and futures transactions. Real Treasury yields rose ahead of the Fed meeting, signaling a pause in a possible hawkish stance. Market analyst James Hyerczyk evaluates the possible effects of the Fed interest rate decision on gold prices.
Hours left until the Federal Reserve’s critical decision
cryptokoin.com As you follow from , gold prices showed a hesitant attitude on Wednesday. In this environment, investors are waiting for the Fed’s policy statement. The Fed will announce its interest rate decision today at 21.00 GMT. Expectations are that the US central bank will maintain its current interest rate stance. Despite this, the broader market is bracing for potential rate hikes as the year progresses. At press time, spot gold was trending sideways around $1,932.
Economic climate and outlook for gold
Amid this expectation, real Treasury yields have remained significantly elevated. This trend embodies the market’s collective prediction that the Fed will take a hawkish but inactive approach. Therefore, it causes a measured outlook on the gold price. Treasury Secretary Janet Yellen’s emphasis that US growth should be aligned with potential rates in order to achieve inflation targets, and the fact that the rise in oil prices forms the background, further complicates the situation, suggesting that a long-term period of high interest rates may occur.
Potential impacts and predictions on gold
According to a note from NAB Commodities Research, it is possible that gold prices could face downward pressure if the Federal Reserve adopts a tougher stance, especially in light of the recently released August US CPI and PPI data. The ongoing scenario points to a potential consolidation in the $1,900 to $1,890 range after spot gold prices failed to overcome the $1,934 to $1,953 resistance.
Market sentiment and additional dynamics
The financial world’s attention is on the Fed’s upcoming policy meeting, which is expected to provide clarity on interest rate expectations and broader economic forecasts. The dominant view, supported by CME’s FedWatch Tool, is that there will almost certainly be an interest rate status quo after the meeting. Tool also predicts a one-third chance of another rate hike before 2024. The key to the emerging scenario will be the information obtained from the press conference where Fed Chairman Jerome Powell will outline the bank’s year-end strategy.
The short-term forecast for gold prices points to an increase
In summary, the balance of probabilities indicates that the Fed’s hawkish tendency, aiming to push inflation towards its 2% target, will continue. This scenario is not particularly positive for gold. Besides this, other central bank meetings, including the Bank of Japan and the Bank of England, are also awaiting market reaction. Additionally, these meeting decisions are likely to further determine gold’s near-term trajectory.
4-Hour gold price chartThe current 4-hour price of gold is slightly above the previous 4-hour price of $1,929.83. The yellow metal is also currently trading above the 200-4H moving average at $1919.585. Additionally, it is above the 50-4H moving average at $1,920.93. These metrics point to potential short-term bullish momentum. The 14-4H RSI value of 60.03 indicates moderately strong momentum without being overbought. This further reinforces the feeling of ascension.
Gold price continues to remain positioned between the main support zone ($1,893.07 to $1,885.79) and the main resistance zone ($1,946.99 to $1,954.88). Overall, market sentiment is leaning towards a cautiously bullish outlook. Moreover, the short-term direction is under the control of two moving averages.
