On Thursday, the Gold price (XAU/USD) is situated in the $2,290s, following a decline of nearly one percent due to reduced safe-haven demand.
Despite this, market sentiment remains generally positive, with Asian stocks closing higher, and Oil prices maintaining seven-week lows.
Gold enthusiasts drove up the price after the Fed opted to maintain interest rates at their current levels and decelerate the pace of reduction of its US Treasury holdings, a mildly dovish move as it unwinds quantitative tightening.
However, the Fed also incorporated a hawkish phrase into its statement to acknowledge the persistent stubbornness of US inflation, stating that, “in recent months, there has been a lack of further progress toward the Committee’s 2 percent inflation objective.”
However, concerns that the Fed might contemplate raising interest rates – which could unfavorably affect non-yielding Gold – were assuaged after Federal Reserve Chairman Jerome Powell described such a possibility as “unlikely”.
In his prepared remarks, Powell omitted any mention of reducing interest rates this year and evaded questions about whether the Fed would continue cutting rates in 2024, during the Q&A session.
However, while the overarching conclusion was that rates were unlikely to decrease anytime soon, additional rate hikes were also not under consideration.
The Gold price (XAU/USD) has met the minimum requirement for completing its bearish Measured Move price pattern by reaching the Fibonacci 0.681 price objective for the final C wave at $2,286. This could indicate that prices may now trend higher.
Measured Move patterns consist of three waves that delineate a zig-zag. The conclusion of the final C wave can be approximated based on the length of wave A, which is typically either equal in length to A itself or a Fibonacci 0.681 ratio of A.
Alternatively, a breakthrough above the cluster of Moving Averages and the peak of wave B at approximately $2,350 could potentially usher in a new, more bullish environment. This could then lead to a retest of the $2,400 highs.
