- Gold rose after the Fed cut interest rates by 25bps as expected.
- The Fed notes that risks are balanced, but there is economic uncertainty, supporting gold's appeal as a safe-haven asset.
- Powell's future comments could provide further insight into the Fed's interest rate path and economic caution.
Gold prices held firm, rising more than 1% after the US Federal Reserve (Fed) cut interest rates by 25 basis points (bps) as expected. However, it appears that the price was already set, according to the golden metal reaction. XAU/USD has rebounded from the day's low of $2,643 and is trading at $2,692.
XAU/USD rose to $2,692 as investors weighed the Fed's cautious outlook on inflation and economic expansion.
The statement emphasizes that Fed officials are observing solid economic expansion despite softening labor market conditions. They said inflation is getting closer to the Fed's 2% target but remains somewhat high.
Fed policymakers also said the risks of meeting the two mandates are “roughly balanced,” but acknowledged uncertainty in the economic outlook. They will remain vigilant about the risks on both sides of the mission.
The FOMC will consider new data, the evolving outlook, and the balance of risks when making future decisions. The decision was unanimous, with Governor Michelle Bowman also supporting the rate cut.
On the balance sheet, Fed officials plan to continue reducing their holdings in Treasury, agency and government mortgage-backed securities.
Fed Chairman Jerome Powell's next press conference is scheduled for 2:00 pm ET.
XAU/USD Price Chart – Daily
Gold rallied around its 50-day simple moving average (SMA) of $2,639 and headed toward $2,700, but buyers lacked the power to push prices higher. The first major resistance area for bulls will be at $2,700. If cleared, the next stop will be the 20-day SMA at $2,716 above $2,750.
Meanwhile, below the November 6th low of $2,652, the yellow metal could challenge $2,639 before testing the October 10th low of $2,603.
economic indicators
Fed interest rate decisions
of federal reserve system The Fed deliberates monetary policy and sets interest rates at eight prescheduled meetings each year. It has two responsibilities: to keep inflation at 2% and to maintain full employment. The main tool for achieving this is to set the interest rates when lending to banks and when banks lend to each other. If the government decides to raise interest rates, the US dollar (USD) will tend to appreciate as foreign capital inflows increase. Lowering interest rates tends to lead to a weaker US dollar as capital flows to countries offering higher returns. If interest rates are left unchanged, attention will be paid to the tone of the Federal Open Market Committee (FOMC) statement and whether it is hawkish (expecting future interest rates to rise) or dovish (expecting future interest rates to decline). get together.
Final release: Thursday, November 7, 2024 19:00
frequency: irregular
Actual: 4.75%
consensus: 4.75%
Previous: 5%
sauce: federal reserve system
