to leave a comment.
▲ Gold/AI-generated image
As gold prices recovered the $4,320 level ahead of the Federal Reserve's decision, whether it breaks $4,366 has emerged as a key variable determining its short-term direction.
According to FX Leaders on September 16 (local time), gold rebounded as U.S. Treasury yields and international oil prices retreated from their highs. The market is pricing in a 92.4% probability that the Federal Reserve (Fed) will raise the benchmark interest rate by 0.25 percentage points. FX Leaders analyzed that how Fed Chairman Kevin Warsh explains the possibility of future additional rate hikes will have a greater impact on gold prices than the rate hike itself.
If the Fed strongly hints at further tightening, upward pressure on short-term Treasury yields and the dollar could continue. Conversely, if Warsh emphasizes uncertainty in growth or financial conditions and adopts a cautious stance, it could support a rebound in gold prices. FX Leaders pointed out that the press conference and new interest rate projections after the rate decision are more important than whether an actual hike occurs.
The U.S. 10-year Treasury yield rose to its highest level since 2023 this week before falling back to around 5.2%. High interest rates reduce the investment appeal of gold, which pays no interest. While the recent decline in Treasury yields and oil price adjustments have provided some breathing room for gold prices, high inflation and the burden of fiscal deficits and debt remain market variables.
The technical key is the resistance zone between $4,316 and $4,326. FX Leaders analyzed that if this zone is decisively broken, $4,366 could be the first upside target. Subsequent resistance levels are $4,402 and $4,435. Conversely, if $4,307 breaks down, $4,261 and $4,223 are presented as the next support levels. The Relative Strength Index (RSI) is recorded at 63, indicating strengthened buying pressure.
Geopolitical tensions in the Middle East have also been cited as a factor supporting the floor of gold prices. Infrastructure disruptions in Saudi Arabia, restrictions on maritime transport in the Gulf region, and risks related to Iran and Houthi forces are underpinning demand for safe-haven assets. FX Leaders analyzed that whether $4,326 is breached and signals from the Fed about further rate hikes are key variables that will determine gold's next direction.
[Article Summary]
-Gold prices recovered the $4,320 level ahead of the Fed's decision, with $4,316-$4,326 presented as a key resistance zone.
-The market is pricing in a 92.4% probability of a 0.25 percentage point rate hike by the Fed and is paying more attention to signals of further hikes.
-If $4,326 is breached, $4,366 is presented as the next target; if $4,307 is broken, $4,261 is a major support level.
*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*
Newsletter
Get key news delivered to your email every morning
to leave a comment.