Gold retreats below $2,400 ahead of FOMC minutes

The price of gold declines for the second day in a row due to a dismal interest-rate outlook and higher-than-expected expectations for interest rates. Fed’s Policymakers are hesitant to cut interest rates until they have made greater headway in combating inflation.

Their opinions are shared by people all across the world, adding to the pressure on the price of gold, which is influenced by interest rates. The price of gold (XAU/USD) fell more than 1.25% on Wednesday around $2,390 per ounce as the precious metal was negatively impacted by a change in the expectation for interest rates, both domestically and internationally.

Fed policymakers have reiterated in recent remarks that there hasn’t been enough progress made to reducing inflation to the Fed’s 2.0% objective to support a reduction in interest rates.

Their opinions had a significant impact on the price of gold, which as a non-yielding asset has a tendency to perform poorly at high interest rates because owning gold has a higher opportunity cost.

When the Fed releases the FOMC Minutes from its most recent policy meeting on Wednesday at 18:00 GMT, the price of gold may be further affected. In the event that the conference minutes reveal officials adopting a more aggressive approach, the price of gold is predicted to keep declining.

Minutes from the most recent Reserve Bank of Australia (RBA) meeting showed that officials had talked about raising interest rates, which was a significant change from earlier sessions.

Technically, the price of gold is moving towards the support of the trendline. Support from the green trendline, which represents the short-term uptrend that started at the beginning of May, is broken by the gold price (XAU/USD).

On Monday, the pair created a Japanese candlestick pattern known as a Shooting Star, which appears as a shaded rectangle on the chart. The next day, the pair closed negatively, which offered more confirmation. Short-term weakness is indicated by the pattern.

Should the decline persist, Gold may drop to the dark grey upward-sloping trendline in the $2,360 range.

But given the proverb that “the trend is your friend,” the precious metal’s short-, medium-, and long-term trends are positive, and the chances point to a final recovery following the correction. The next target, the psychologically important $2,500 level, would probably be reached if the rally were to break above the new all-time high of $2,450.