Gold Price Forecast: XAU/USD Whipsawed But Leans Towards Trendline Support On Fed Hike

By Ross J Burland of FXStreet

Wednesday, July 26, 2023 3:38 PM EDT

The Gold price has been whipsawed after the Federal Reserve, Fed, raised its interest rate decision by a 25 bps rate hike to 5.25-5.50%, as expected. At the time of writing, Gold is volatile between $1,973 and $1,965 so far as the market digests the statement and key points as follows:

Federal Reserve statement, and keynotes

Fed says FOMC vote was unanimous.
CBO revises 2023 us real Gross Domestic Product growth forecast to 0.9% from 0.1% forecast in Feb due to H1 labour market strength.
Fed: Will consider extent of additional firming to curb inflation.
Fed: We will continue to reduce our bond holdings as described in previously announced plans.
Fed: Tighter credit conditions are likely to weigh on economic activity, hiring and inflation, extent to which remains uncertain.
Fed: Recent indicators suggest economic activity has been expanding at a moderate pace vs a modest pace in June statement.
Fed: We will continue to assess additional information and its implications for policy.
Fed: Banking system is sound and resilient.

As a result of the statement:

Interest rate futures put chance of Fed hike at 18% in September, 36.5% in November post-FOMC.
Probability of Fed hike was 18.9% in Sept, 37.3% in nov pre-FOMC.

Gold price technical analysis

Ahead of the Fed, daily and 15 min chart:

(Click on image to enlarge)

Gold price update, after Fed statement and interest rate decision:

(Click on image to enlarge)

So far, the price holds in bullish territory while on the front side of the trendline and above yesterday's highs and the day's low. $1,963 and $1,975 are the breakout levels.

(Click on image to enlarge)

More By This Author:

WTI Price Analysis: WTI Retreats Towards $79.00 Ahead Of Fed Decision
GBP/USD To Reach The 1.40 Level By End-2024 – Scotiabank
Pound Sterling Adds More Gains As BoE Prepares For 14th Consecutive Rate Hike

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