- Gold climbs with the USD decline then reverses sharply as the greenback erases losses.
- The FOMC changes its political strategy by adopting an “average inflation target”.
Gold prices are down for the day after a wild ride after updates from the Federal Reserve on its statement on monetary policy goals and strategy. Initially, the XAU / USD surged to $ 1,976 / oz, hitting the highest level in one week, but then fell back to fall to $ 1,909. As of this writing, the yellow metal is hovering around $ 1925 down $ 25 for the day.
Gold movements followed the greenback which, during the Fed’s Powell presentation, fell, but then more than recovered. The DXY fell to a weekly low at 92.44 and recently printed a new daily high at 93.30.
The only constant has been stock prices in the United States which not only did not retreat, but also printed new highs. The Dow Jones is up 260 points or 0.92% while the Nasdaq is up 0.29%.
The Fed announced a change in its approach to monetary policy. The central bank has adopted an average inflation target of 2%, allowing inflation to rise “moderately” higher for a period of time. He also mentioned whether he will focus on maximum employment shortfalls rather than “gaps”. The message from the Fed is that it will allow inflation to rise (moderate) during good economic times.
Levels to watch
Despite increasing volatility, XAU / USD continues to trade sideways with a short-term bearish bias, unable to consolidate above $ 1,950 and supported by the $ 1,900 figure.