- The Fed leaves rates that are unchanged at 4.25% at 4.50% and highlights increasing uncertainty from economic perspectives.
- Political decision -makers note solid growth and a solid labor market, but the high risks of high inflation.
- Reduction in the balance sheet to continue as planned; Traders have comments from Powell for political orientation.
Gold price Stay on the back after Federal reserve (Fed) has maintained unchanged interest rates. XAU / USD is negotiated at $ 3,394, down more than 1%, while merchants are preparing for the Fed President's press conference Jerome Powell.
XAU / USD dropped by more than 1% to $ 3,394 while merchants are waiting for Powell's press conference after a prudent tone tone
The federal reserve held price At a range of 4.25% to 4.50% unanimously, as expected, and mentioned this uncertainty about the economy prospects has increased further, adding that the risks of higher unemployment and inflation have increased.
Nourished Managers have added that the economy remains to develop at a solid pace, recognizing that the labor market remains solid, but that the risks of inflation are considered somewhat high.
Regarding the reduction of the balance sheet, the press release indicates: “The Committee will continue to reduce its assets in cash securities and agency debt and to titles in terms of mortgage debt.”
Gold price reaction
Gold prices have slightly exceeded $ 3,390 but did not reach $ 3,400. However, the main catalyst could be the tone of the president of the Fed, Jerome Powell, during the press conference. If it remains a fellowshipman as it was previously, a new drop in XAU / USD is planned, which could bring a test of the number of $ 3,350 before the $ 3,300 mark.
Conversely, a dominant position could open the way to gold buyers to test $ 3,450 and perhaps the record summit of $ 3,500.
FAQ GOLD
Gold played a key role in the history of man because it was widely used as a reserve of value and means of exchange. Currently, apart from its shine and its use for jewelry, precious metal is largely considered as an asset in Houmle, which means that it is considered a good investment at the turbulent time. Gold is also widely considered as coverage against inflation and the depreciation of currencies because it was not based on a specific transmitter or government.
Central banks are the biggest gold holders. In their objective of supporting their currencies at the turbulent time, central banks tend to diversify their reserves and buy gold to improve the perceived force of the economy and money. High gold reserves can be a source of confidence for the solvency of a country. The central banks added 1,136 tonnes of gold worth around $ 70 billion to their reserves in 2022, according to World Gold Council data. This is the highest annual purchase since the start of the files. The central banks of emerging savings such as China, India and Turkey quickly increase their gold reserves.
Gold has an opposite correlation with the US dollar and American treasury vouchers, which are both the main security and security assets. When the dollar depreciates, gold tends to increase, allowing investors and central banks to diversify their assets on turbulent times. Gold is also inversely correlated with risk assets. A stock exchange on the stock market tends to weaken the price of gold, while sales in the risky markets tend to promote precious metal.
The price can evolve due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly degenerate gold prices because of its security status. As an without efficiency, gold tends to increase with lower interest rates, while the cost of higher silver generally weighs the yellow metal. However, most movements depend on how the US dollar (USD) behaves as the asset is assessed in dollars (XAU / USD). A strong dollar tends to maintain the price of controlled gold, while a lower dollar is likely to raise gold prices.
