Gold holds the pullback early Thursday, having renewed record highs at $3,708 in a knee-jerk reaction to the Fed announcement.
US Dollar recovers on Fed Chair Powell’s cautious stance on further policy easing.
Gold retreats from extreme overbought conditions on the daily chart, keeping buying interest alive.
Gold is licking its wounds near $3,650 in Thursday’s Asian trades, having stalled its pullback from fresh record highs of $3,707 reached in an initial reaction to the US Fed policy announcements.
Gold witnessed intense volatility during the Fed event on Wednesday, initially spiking to a new lifetime high before falling as low as $3,646 to settle the day just above $3,650.
Fed delivered on the expected 25 basis points interest rate cut but the Summary of Economic Projections , the so-called Dot Plot chart, showed that the Fed policymakers project two additional rate cuts this year.Markets read this as dovish and smashed the USD across the board, spiking up Gold to new record highs.
However, the Greenback staged an impressive comeback alongside US Treasury bond yields after Fed Chairman Jerome Powell, in his post-policy meeting press conference, adopted a measured rhetoric on further policy easing.Powell signaled caution on future rate cut outlook by saying that “the policy action as a risk-management cut in response to the weakening labour market and the central bank is in a ‘meeting-by-meeting’ situation,” per Reuters.
The resurgent USD demand and the Fed’s restraint triggered a pullback in the non-yielding Gold.
Traders are now pricing in a 87.7% chance of another 25 bps cut at the Fed’s October meeting, compared to a 74.3% probability a day earlier, according to the CME Group’s FedWatch tool.
With the dovish expectations surrounding the Fed still intact, any downside in Gold is likely to be seen as a good bargain-buying opportunity, keeping the uptrend alive.
Markets now look forward to the mid-tier US Jobless Claims data for fresh trading impetus.Additionally, geopolitical headlines and US President Donald Trump’s commentary could also play their part in driving Gold price action in the sessions ahead.
Daily technical analysis
The daily chart shows that Gold buyers seem to be given another chance for a sustained uptrend as the 14-day RSI has finally eased considerably from the extreme overbought zone, from 80 to 72 levels, as of writing.
If dip-buying emerges and gathers strength, Gold could retest the record high at $3,708. A daily candlestick closing above that level will open doors toward the $3,750 region.
However, Gold could challenge this week’s low at $3,627 if the corrective decline extends.
Further down, the $3,600 round figure will be tested, below which the previous week’s low of $3,578 will be next on sellers’ radars.
GOLD down but not out in the Fed’s aftermath
Gold is licking its wounds near $3,650 in Thursday’s Asian trades, having stalled its pullback from fresh record highs of $3,707 reached in an initial reaction to the US Fed policy announcements.
Gold witnessed intense volatility during the Fed event on Wednesday, initially spiking to a new lifetime high before falling as low as $3,646 to settle the day just above $3,650.
Fed delivered on the expected 25 basis points interest rate cut but the Summary of Economic Projections , the so-called Dot Plot chart, showed that the Fed policymakers project two additional rate cuts this year.Markets read this as dovish and smashed the USD across the board, spiking up Gold to new record highs.
However, the Greenback staged an impressive comeback alongside US Treasury bond yields after Fed Chairman Jerome Powell, in his post-policy meeting press conference, adopted a measured rhetoric on further policy easing.Powell signaled caution on future rate cut outlook by saying that “the policy action as a risk-management cut in response to the weakening labour market and the central bank is in a ‘meeting-by-meeting’ situation,” per Reuters.
The resurgent USD demand and the Fed’s restraint triggered a pullback in the non-yielding Gold.
Traders are now pricing in a 87.7% chance of another 25 bps cut at the Fed’s October meeting, compared to a 74.3% probability a day earlier, according to the CME Group’s FedWatch tool.
With the dovish expectations surrounding the Fed still intact, any downside in Gold is likely to be seen as a good bargain-buying opportunity, keeping the uptrend alive.
Markets now look forward to the mid-tier US Jobless Claims data for fresh trading impetus.Additionally, geopolitical headlines and US President Donald Trump’s commentary could also play their part in driving Gold price action in the sessions ahead.
Daily technical analysis
The daily chart shows that Gold buyers seem to be given another chance for a sustained uptrend as the 14-day RSI has finally eased considerably from the extreme overbought zone, from 80 to 72 levels, as of writing.
If dip-buying emerges and gathers strength, Gold could retest the record high at $3,708. A daily candlestick closing above that level will open doors toward the $3,750 region.
However, Gold could challenge this week’s low at $3,627 if the corrective decline extends.
Further down, the $3,600 round figure will be tested, below which the previous week’s low of $3,578 will be next on sellers’ radars.
Categories
Recent Posts
GOLD risks pullbacks amid oversold conditions, Gulf war
GOLD crumbles as Gulf war escalates; is a turnaround coming?
GOLD rebounds as Middle East war escalates, but not out of woods yet
LIKE THIS ARTICLE? SHARE IT!
Ready to trade?
Unleash your trading skills with your Maxain account today!
Easy funding & withdrawals
No deposit fees