Gold turns lower on hawkish Powell
Gold has turned lower after the Fed Chair was more hawkish than the FOMC statement suggested. The US dollar recovered, while bond yields revisited their earlier highs. Stock indices slumped to fresh lows on the day.
Overall, the Fed has given us hints that it may reduce the pace of rate hikes from December, but the hawkish comments from Powell means there's scope for terminal interest rates to be higher than initially thought earlier when the FOMC statement was released.
As a result, gold has given up its gains made earlier, but it was still clinging onto short-term support at $1644/45 area. If this breaks, then there is little further support until the September low.
So, a potential drop in gold to a new low for the year is starting to look more likely. Will we get to $1600 now that the Fed decision is out of the way? If there's acceptance below $1644/45 area later, then I wouldn't bet against it.
By Fawad Razaqzada on behalf of FOREX.com
Overall, the Fed has given us hints that it may reduce the pace of rate hikes from December, but the hawkish comments from Powell means there's scope for terminal interest rates to be higher than initially thought earlier when the FOMC statement was released.
As a result, gold has given up its gains made earlier, but it was still clinging onto short-term support at $1644/45 area. If this breaks, then there is little further support until the September low.
So, a potential drop in gold to a new low for the year is starting to look more likely. Will we get to $1600 now that the Fed decision is out of the way? If there's acceptance below $1644/45 area later, then I wouldn't bet against it.
By Fawad Razaqzada on behalf of FOREX.com
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