XAUUSD : Gold turned down sharply after the FOMC meeting
Updated
Closing the trading session on May 22, spot gold price decreased 1.8% to more than 2,377 USD/ounce after hitting a historic high of 2,450 USD/ounce on May 20. Calculated from the intraday high of 2,426 USD/ounce, spot gold price has decreased by about 50 USD/ounce. Gold futures contracts also decreased 1.4% to nearly 2,393 USD/ounce. As of the time of writing, spot gold prices continue to be under selling pressure, reaching a low of 2,366 USD/ounce.
Jim Wyckoff, Senior Analyst at Kitco Metals, said the market is seeing some sustained liquidation during the week, with some short-term futures traders taking profits. This is completely normal when gold prices reach new peaks.
"Tomorrow will be an important trading day and gold prices need to recover immediately, otherwise there will be a strong correction in the short term," Mr. Wyckoff added.
The newly released minutes of the FOMC meeting shocked the gold market, leading to a wave of strong selling. According to the minutes, Fed officials expressed concern about persistent inflation in the first quarter of 2024. Some even favored further tightening of monetary policy if inflation continued to exceed expectations. .
In addition, the minutes also revealed the Fed's view that it will take more time than expected to bring inflation to the target level of 2%. This makes many investors worry that the Fed's interest rate cutting roadmap may be delayed.
Compared to previous sessions, this time's minutes were considered much more "hawkish", demonstrating the lack of confidence of some Fed officials about the current level of inflation control. While acknowledging that inflation has fallen over the past year, the minutes also note that there has been no significant progress in achieving the 2% inflation target in recent months.
The latest Consumer Price Index (CPI) report shows that inflation is showing signs of decreasing. However, Fed policymakers emphasized that a single data point or monthly report is not enough to accurately assess trends. Therefore, the Fed will likely wait a few more months to monitor the next reports and ensure that inflation has been effectively controlled before considering reducing interest rates.
Jim Wyckoff, Senior Analyst at Kitco Metals, said the market is seeing some sustained liquidation during the week, with some short-term futures traders taking profits. This is completely normal when gold prices reach new peaks.
"Tomorrow will be an important trading day and gold prices need to recover immediately, otherwise there will be a strong correction in the short term," Mr. Wyckoff added.
The newly released minutes of the FOMC meeting shocked the gold market, leading to a wave of strong selling. According to the minutes, Fed officials expressed concern about persistent inflation in the first quarter of 2024. Some even favored further tightening of monetary policy if inflation continued to exceed expectations. .
In addition, the minutes also revealed the Fed's view that it will take more time than expected to bring inflation to the target level of 2%. This makes many investors worry that the Fed's interest rate cutting roadmap may be delayed.
Compared to previous sessions, this time's minutes were considered much more "hawkish", demonstrating the lack of confidence of some Fed officials about the current level of inflation control. While acknowledging that inflation has fallen over the past year, the minutes also note that there has been no significant progress in achieving the 2% inflation target in recent months.
The latest Consumer Price Index (CPI) report shows that inflation is showing signs of decreasing. However, Fed policymakers emphasized that a single data point or monthly report is not enough to accurately assess trends. Therefore, the Fed will likely wait a few more months to monitor the next reports and ensure that inflation has been effectively controlled before considering reducing interest rates.
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