Gold Prices Ease Following Fed Annoucement

Key Insights

• Gold Prices Eased
• The Dollar whipsawed and was Nearly Unchanged
• U.S. Treasury yields Surged higher Following the Fed Statement

Gold prices moved lower on Wednesday in the wake of the Fed meeting. The Fed announced that they were raising borrowing rates by 25-basis points, the first increase in rates since December of 2018. The markets seemed to focus on the change in the median rate increase for 2022, which was up to 1.75%

This figure was already priced into the markets. The Fed also increased its target for 2023 to 2.75%. The Fed also said they would raise rates again at an upcoming meeting. Additionally, the Fed will start to reduce its balance sheet.

Technical Analysis

Gold prices slipped following the Fed announcement. Resistance is seen near the 10-day moving average at $1,970. Additional resistance is seen near the March highs at $2,070. Support is seen near the former breakout level at 1,900. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal.

The medium-term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This scenario occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line).