Gold price tanked shortly after the FOMC decision, as the US Federal Reserve appears to have assumed a more hawkish tone concerning inflation and the QE program.
The latest FOMC projections reveal that three more policymakers see a lift-off of the interest rates from zero in 2022, bringing the total number to seven. Only four policymakers took this stance in March.
Following the FOMC decision to leave the policy rate unchanged, FOMC Chair Jerome Powell delivered comments on the monetary policy outlook. Critically, Powell mentioned that “many participants forecast conditions for lift-off will be met sooner than previously thought.”
The markets interpreted the events and wordings to mean a surprise shift in tone to a more hawkish one, strengthening the US Dollar across the board. Consequently, the XAU/USD pair fell hard in response, with gold prices now trading at $1827 as of the time of writing.
Gold price on the XAU/USD daily chart is testing the support wall between 1828 and 1840, after the 1.54% drop in the pair. A breakdown of this price level opens the door towards 1815.20, with 1800.00 and 1789.49 serving as additional support levels.
On the flip side, a bounce on the support wall allows for a brief reprieve in gold prices, with 1860.77 and 1881.68 serving as upside barriers on which potential rally selling could resume. Only a break of 1900.95/1917.00 allows the gold price to resume the uptrend that commenced in April following the resolution of the March 8/March 31 double bottom.
