FOMC Decision Seen as Price-Friendly for Gold, Triggers Fresh Rally

The Federal Reserve maintained its monetary policy unchanged at the recently concluded Federal Open Market Committee (FOMC) monetary policy meeting, as anticipated. At 5.25% to 5.50%, the main Fed Funds interest rate range remained unchanged. It seems that the FOMC statement took a moderate stance on policy, neither being very dovish nor overly hawkish. According to the statement, the US economy is expanding and while inflation has decreased, it is still high.

FOMC Decision Seen as Price Friendly for Gold

Following a Federal Reserve monetary policy statement that precious metals bulls viewed as price-friendly, gold prices are rising and reaching daily highs during North American trading on Wednesday. At $2,186.00 per ounce, spot gold is trading at the time of writing, up +1.37%, gaining roughly +$28,16 while gold futures for April was recently up +$29.90, trading at $2,189.60 per ounce, up +1.41%.

Rate Cut Timing Awaits Upcoming Key Data

According to the statement, rate cut won’t happen until the Fed is more certain that inflation has subsided. The Fed forecasts three interest rate reduction this year, according to the announcement. Based on the gold market’s response, traders concluded that the FOMC statement was not overly aggressive and that the Fed was willing to put up with slightly higher inflation for a longer period of time. The market is currently anticipating Fed Chairman Jerome Powell’s afternoon news conference. Powell’s comments will be keenly watched by traders for any hints on the direction and timing of Fed monetary policy in the future.

The US dollar index was stronger prior to the FOMC statement, but it is now weaker according to the major outside markets. From the bottom in March, the USDX had seen a strong recovery, and the technical edge is with the bulls. The price of Nymex crude oil is currently trading at $81.50 a barrel, a significant decline. At the moment, the yield on the benchmark 10-year U.S. Treasury note is approximately 4.3%.

Bulls in April gold futures have a strong technical lead in the short term. The daily bar graph shows an upswing that has lasted for four weeks. On the daily bar chart, a bullish pennant pattern has formed; nevertheless, the formation requires an upside breakthrough to occur very soon. The next upward price target for bulls is to generate a close above strong resistance at the $2,203.00 contract high. The next short-term downside target for bears is to drive futures below the strong technical support level of $2,100.00. Resistance is first noticeable at $2,180.00 and subsequently at $2,190.00. First support is seen at this week’s low of $2,149.20 and then at $2.140.00.