Gold prices edged lower on Wednesday after the Federal Reserve maintained its benchmark interest rate and signaled increased risks of inflation and unemployment. Spot gold (XAU/USD) was trading down over 1% at $3,394 as investors awaited further clarity from Fed Chair Jerome Powell’s upcoming press conference.
As widely expected, the Federal Open Market Committee voted unanimously to keep rates unchanged at 4.25%–4.50%. The Fed noted that while the U.S. economy continues to grow at a solid pace and the labor market remains strong, uncertainty around the economic outlook has increased, with inflation risks now seen as “somewhat elevated.”
“The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities,” the Fed’s statement added, reaffirming its balance sheet tightening efforts.
Gold Prices Hover Near Support as Market Awaits Powell’s Tone
Gold briefly pushed past $3,390 following the Fed’s announcement but failed to break through the $3,400 resistance level. The next directional cue is expected from Powell’s remarks during the post-meeting press conference.
If Powell maintains a hawkish tone and underscores the Fed’s concerns about persistent inflation, analysts anticipate further downside in XAU/USD. A break below the $3,350 support level could expose gold to a test of $3,300.
Conversely, a more dovish tone from Powell—hinting at potential rate cuts or a softer economic stance—could support renewed bullish momentum in gold, with buyers targeting the $3,450 level and potentially a retest of the all-time high near $3,500.
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