Fed policy drove XAUUSD higherThe Federal Reserve released its latest interest rate decision, keeping the target range for the federal funds rate unchanged at 4.25% - 4.5%, which is in line with market expectations.
The Federal Reserve released its latest interest rate decision, maintaining the target range for the federal funds rate at 4.25% - 4.5%, which met market expectations. The Fed anticipates two 25 - basis - point rate cuts in 2025. Additionally, the Fed significantly lowered its projection for US GDP growth this year, reducing the economic growth expectation from 2.1% to 1.7%, and raised the core PCE inflation projection to 2.8%.
These announcements had the following impacts on gold:
Enhanced Safe - Haven Appeal: Gold has safe - haven properties. When market uncertainties increase, investors often turn to gold for wealth preservation and appreciation. The Fed's decision to keep interest rates unchanged and its indication of potential rate cuts, along with the downward - revised economic growth forecast and upward - revised inflation projection, reflect a cautious stance on the economic outlook. This heightens market uncertainties and strengthens the safe - haven appeal of gold, prompting investors to buy gold and driving up its price.
Reduced Holding Costs: The Fed's indication of rate cuts leads to a decline in market interest rate expectations, thereby reducing the opportunity cost of holding gold. Since gold is a non - interest - bearing asset, when the yields of other interest - bearing assets decrease, the relative attractiveness of gold increases. As a result, investors are more inclined to hold gold, pushing up its price.
Weakening of the US Dollar: The Fed's policies have a significant impact on the US dollar exchange rate. Generally, expectations of rate cuts reduce the attractiveness of US dollar - denominated assets to international capital, leading to the depreciation of the US dollar. Given that gold is priced in US dollars, a weaker US dollar makes gold relatively cheaper for investors holding other currencies, attracting more investors to buy gold and driving up the gold price.
Affected by the above - mentioned news, the gold price reached an all - time high. After the Fed's announcement, spot gold once broke through the 3,050 - per - ounce mark, setting a new historical record.
💎💎💎 XAUUSD 💎💎💎
🎁 Buy@3035 - 3040
🎁 SL 3027
🎁 TP 3050 3055 3060
🎁 Sell@3060 - 3063
🎁 SL 3069
🎁 TP 3050 3045 3040
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