After the hawkish Fed's September interest rate resolution, the US dollar surged in the short term and reversed the day's decline, while gold retreated more than $10 from its intraday high.
The Federal Reserve's "Eagle hover", with gold rebounding and stopping near 1950
After the hawkish Fed's September interest rate resolution, the US dollar surged in the short term and reversed the day's decline, while gold retreated more than $10 from its intraday high.
On Wednesday (September 20th local time), the Federal Reserve kept the benchmark interest rate unchanged in the range of 5.25% to 5.50% as expected. According to the policy statement, 12 officials are expected to raise interest rates again this year, while 7 officials are expected to remain unchanged.
The dot matrix chart of the Federal Reserve shows that the median expected federal funds interest rates from 2023 to the end of 2025 are 5.6%, 5.1%, and 3.9%, respectively (June expectations were 5.6%, 4.6%, and 3.4%, respectively), and 2.9% by the end of 2026, with long-term maintenance at 2.5%. At the same time, the Federal Reserve has retained the wording of "additional tightening policies".
According to the September economic forecast chart of the Federal Reserve's FOMC, the median interest rate forecast for next year will be raised by 50 basis points, the unemployment rate forecast for 2023-2025 will be lowered, and the GDP forecast for this year will be significantly raised; Most participants believe that real GDP faces high uncertainty and risks are roughly balanced; Most participants believe that the unemployment rate faces high uncertainty and the risks are roughly balanced; Most of the attendees believe that PCE inflation and core PCE inflation face high uncertainty, with an upward risk tendency.
Sure enough, this is a 'Eagle Hover' meeting! After the interest rate resolution, the Federal Reserve's swap market showed that traders will postpone their first interest rate cut until September next year. In addition, the probability of raising interest rates in November has increased, and the likelihood of maintaining high interest rates for a long time has also significantly increased.
Stimulated by the hawkish attitude of the Federal Reserve, the US dollar index quickly rose by more than 40 points from the 104.75 line to around 105.20, while gold fell by a few dollars to 1939.
The Chairman of the Federal Reserve, Powell, was also quite tough at the press conference, stating that stronger than expected economic growth requires higher interest rates and will further raise them if appropriate.
Powell pointed out that keeping interest rates unchanged does not mean reaching the "restrictive stance we seek", and the Federal Reserve has not made a decision on whether interest rates are sufficiently restrictive. The actual interest rate is now a 'substantial positive value' and needs to remain positive for a period of time.
Regarding the neutral interest rate (natural interest rate), Powell stated that it may have already risen and may be higher than the long-term interest rate.
Powell also stated that he never intended to signal any timing of interest rate cuts and stated that there would be an opportunity to do so at an appropriate time.
After Powell's aforementioned speech, the US dollar index further expanded its increase after the interest rate resolution to around 105.40; Gold retreated to 1931, breaking away from the intraday high of over ten US dollars and taking back all of its intraday gains.
The author believes that the digestion of the expectation of the Federal Reserve's tightening in the future market will be the key factor affecting the direction of gold. However, the headwind brought about by the Joint Reserve may not dissipate for a moment, and one should be wary of a significant pullback in gold prices.
Gold Technology Analysis: Pay attention to whether it can effectively break through the daily decline wedge!
The daily chart of gold shows that the price hit a record high of 2082 (Y point) on May 4th, and the market continued to decline. After reaching a low of 1885 (A point) on August 21st, it stopped falling and rebounded. Currently, we are testing the downward trend pipeline (i.e. the downward wedge upward track) since the Y point.
Once the above downward wedge is effectively broken, bulls are expected to receive more encouragement. The upper 1960-1966 area concentrates on the ideal convergence point of the 0.382YA regression level and bearish arbitrage model. If this obstacle can be overcome, the future market may further develop towards the 1985-2000 area.
Once the company reaches the 2000 level again, bulls can even hope for prices to rise again to the 2050~2020 region.
Pay attention to the support from 1925 to 1930 below. If the price falls below the above position, more downside risks may be triggered, and it is not ruled out that it will fall again towards the 1900 level at that time.
