The price of GOLD traded higher after the Federal Reserve decided to hike rates by 75bps. Will this continue or is it likely a short term rally?
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The Federal Reserve raised the federal funds rate by 75bps today in line with forecasts. Following this the FOMC press conference saw Chairman Jerome Powell continue to talk of higher rates. Recently Bank of America came out with their new expectations for the federal funds rate and are forecasting rates to be near to 5.00% by the end of the year. With rates currently at 3.25% that would mean there is a possible 1.75% to find in the next few meetings towards the end of the year. This latest hike may have been forecast but is still a hawkish move by the Fed and the USD will likely strengthen further.
The USD Index traded from through the 2022 highs and found momentary resistance at the 2001 September lows. Of 111.30. The price has since traded back through these highs and if this were to continue then Gold prices could reverse and move lower. Gold jumped higher on the rate announcement however we expect this to be a short term rally as the Fed look to hike rates further.
Looking at the price of Gold we saw a move beyond the recent 4hr consolidation highs. This would have invited buyers into the market, however, the price found resistance at a US Session point of control at $1686.00. If the price remains in this 4hr range a move lower could be ahead for the price of Gold with support resting at $1630.00
Did you see our EURGBP Analysis? You can see it here.
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