Gold Price Forecast XAU/USD – Price Action Suggests Traders Aren’t On Same Page as Hawkish Fed

Gold futures were up on Wednesday, but off their intraday peak as they hovered near a seven-month high reached earlier in the session. The move was impressive because it came after the minutes of the Federal Reserve’s December meeting showed all its policymakers remained committed to fighting inflation, but agreed on the need to slow rate hikes in 2023.

On Wednesday, February Comex Gold futures settled at $1859.00, up $12.90 or +0.69%. The SPDR Gold Shares ETF (GLD) finished at $172.65, up $1.59 or +0.93%.

Fed Says No Rate Cuts in 2023

Officials at the Federal Reserve’s Dec. 13-14 policy meeting acknowledged they had made “significant progress” over the past year in raising rates enough to bring inflation down, the minutes showed.

The minutes also showed that officials “emphasized the need to retain flexibility and optionality when moving policy to a more restrictive stance,” with a scale back to quarter-percentage-point increases as of the Jan. 31 – Feb. 1 meeting possible, but open to an even higher “terminal” rate if inflation persists.

After the minutes, Fed fund futures held bets that the central bank would raise rates another half of a percentage point in coming months before pausing just shy of 5%.

Gold held up surprisingly strong despite Fed minutes that state clearly that rates will continue to rise and there would be no rate cuts in 2023 contrary to what the market has priced.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $1871.30 will signal a resumption of the uptrend. A move through $1733.50 will change the main trend to down.

The minor trend is also up. A trade through $1792.70 will change the minor trend to down.

The nearest resistance is a long-term 50% level at $1861.30, followed by a long-term Fibonacci level at $1915.30.

The closest support is a pivot at $1832.00, followed by $1804.30.

Daily Swing Chart Technical Forecast

Trader reaction to $1861.30 is likely to determine the direction of the February Comex gold futures contract early Thursday.

Bullish Scenario

A sustained move over $1861.30 will indicate the presence of buyers. Taking out $1871.30 will indicate the buying is getting stronger. This could trigger an acceleration to the upside with $1915.30 the next major target price.

Bearish Scenario

A sustained move under $1861.30 will signal the presence of sellers. If this creates enough downside momentum then look for the selling to possibly extend into the pivot at $1832.00. A trade through this level could trigger an acceleration into $1804.30.