XAU/USD Slips Back As The Post-Powell Bounce Fades

XAU/USD declined around 1.6% on Wednesday, falling from a session high near 4,610 to a session low about 4,510 around the FOMC decision, then recovering to roughly 4,565 during Powell's press conference before slipping back to retest the 4,520 area and currently trading close to 4,534. The session showed a steady series of lower highs and lower lows into the rate decision, with the late-session price action carving a tentative basing pattern in a 4,520 to 4,560 corridor as the post-Powell bounce gave way to a second leg of selling.

The Federal Reserve (Fed) held the federal funds rate at 3.50% to 3.75% for a third consecutive meeting, sharpening its inflation language to 'elevated' from 'somewhat elevated' while citing higher global energy prices and a high level of uncertainty around Middle East developments. The 8-4 Federal Open Market Committee (FOMC) vote drew the most dissents since October 1992: Stephen Miran preferred a 25 basis points cut, while Beth Hammack, Neel Kashkari, and Lorie Logan voted to hold but opposed the easing bias added to the statement. Chair Powell described the decision as 'a closer call than in March,' said the energy price surge had not yet peaked, and noted that the number of officials seeing a hike as likely as a cut had moved up. Powell added that a shift away from the easing bias could come as early as the next meeting and that he wanted to see energy and tariff pressures end before any rate cuts, hawkish-tilted comments that lifted the US Dollar broadly and capped gold's intraday recovery into the close.