Gold Price rallies after FOMC’s dovish language

Gold prices have shot higher on a hint of dovishness in today’s interest rate statement and policy decision by the Federal Open Market committee. The vote was unanimous in favour of the policy whereby the Fed hiked by 75bps, setting the target range at 3.75% – 4.00%.

Gold is up around 1% following the release of FOMC’s statement trading at $1,663, rising from the day’s low of $1,645.68, printing a post-Fed high of $1,665.53 so far.

Gold price is higher on the back of the swaps markets that are now downgrading the chances of another 75bps at its December meeting due to such changes in the statement as follows:

“In determining the pace of future increases in the target range, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial deviations.”

Before the FOMC statement, the terminal top was priced at 5.03% in May, it’s down to 4.95% now after the new sentence in the FOMC statement that signals more increases but hints at possibly smaller increments. The US dollar is testing critical trendline support as shown on the hourly and daily charts.