#The Fed's policy shift##GoldTechnical Analysis#24K99 News During the New York session on Wednesday, September 18, the gold market experienced intense fluctuations. After the Fed cut interest rates by 50 basis points, spot gold prices briefly hit a historical high. However, Powell's speech caused a sharp decline in the gold price from the top, dropping below $2550 per ounce.
The Fed did indeed initiate an interest rate cut as expected on Wednesday, announcing a 50 basis points decrease. The Fed also projects that by the end of 2024, the federal funds rate will be around 4.4%.
The Fed policymakers have decided to lower borrowing costs as they are increasingly confident that inflation is moving "sustainably" towards the Fed's 2% target. However, they acknowledge that the dual mandate of price stability and maximum employment is broadly balanced, while also pointing out the uncertain economic outlook.
After the Fed cut interest rates by 50 basis points, spot gold prices briefly surged to $2600.15 per ounce, hitting a historical high. However, after Powell's speech, gold prices plummeted, reaching a low of $2546.79 per ounce. Powell stated during the press conference not to consider the 50 basis point rate cut as a "new pace" of rate cuts.
(Spot gold 30-minute chart, source: 24K99)
As of Wednesday's close, spot gold fell 0.4% intraday to $2559.19 per ounce. In early Asia trading on Thursday, the gold price was trading around $2557 per ounce.
Bloomberg reported that after the Federal Reserve cut interest rates by 50 basis points on Wednesday, Fed Chairman Powell indicated that policymakers are not in a hurry to make substantial rate cuts in the future, causing the gold price to drop from its historical highs.
New York independent metal trader Tai Wong said, "Gold soared to a historic high, but bond yields also rose sharply."
Powell said at a news conference, "We have been waiting, I think this patience has indeed paid off. We believe that inflation will continue to move towards below 2%, so I think that's the reason for our strong move today. I do not think anyone should see this and say, 'Oh, this is a new rhythm.' I think we will carefully meet and make decisions at the meeting."
Powell also pointed out that if appropriate, the Fed can speed up or slow down the pace of rate cuts, or even choose to pause the cuts; this 50 basis point cut does not indicate that we are eager to take action."
Shocking! Gold price plunges more than $53 from historic highs after Powell's speech. What's going on?
How to trade gold?
FXStreet analyst Christian Borjon Valencia's latest article on Thursday analyzing the technical trend of the gold price.
Valencia points out that gold prices fluctuated during the North American trading session on Wednesday. The price of gold reached a historical high of $2600 per ounce at one point. However, buyers failed to break through this level, which could pave the way for a pullback in gold prices.
The "magnificent seven" performed well in 2023. Relative Strength Index(RSIAt lower levels, sellers dominate in the short term.
Valencia states that if the price of gold falls below the low of September 13th at $2556 per ounce, the next support level will be even lower.ResistanceIt will be $2550 per ounce.
Once the above level is breached, the next target for the gold price will be the high of August 20 at $2531 per ounce (now turned into a support level), followed by targeting the low of September 6 at $2485 per ounce.
(Spot gold daily chart source: FXStreet)
Valencia added that from the upside, if the gold price continues to rise, the first resistance level will be $2600 per ounce. A breakthrough of the latter will target the psychological levels of $2650 per ounce and $2700 per ounce.
At 08:26 Beijing time, spot gold was trading at $2557.25 per ounce.