Following the Federal Reserve’s decision on Wednesday, it’s clear that the central bank’s quarter-point interest rate cut marks a significant turning point. After a long break, officials seem to be shifting their focus from inflation to the labor market. Notably, Stephen Miran, a Trump appointee who joined the board this week, voted for a larger cut.
Now, the markets are looking to the Bank of Canada, which cut its rates, and the People’s Bank of China, which kept its rates steady. The Hong Kong Monetary Authority had to follow the Fed’s lead, while the Bank of England and the Bank of Japan will make their decisions later today and tomorrow, respectively. The expected rate hike by the Bank of Japan seems likely, which could draw global central banks’ attention away from inflation and toward their upcoming meetings.
The Federal Reserve’s quarter-point cut had a volatile impact on , which swung between gains and losses, hitting a low point after reaching a record high on Wednesday. Bullion last traded at $3,659.40 per ounce. Bond markets also rallied after a pullback, with the yield on benchmark 10-year Treasury notes falling to 4.068% from 4.076% at the U.S. close. The U.S. dollar held steady at 97.024 after recovering from a three-and-a-half-year low on Wednesday.
Reviewing the post-Fed movements of gold futures, I expect that the Federal Reserve’s quarter-point cut has left the market in a state of indecision. It’s unclear if the Fed will provide more easing ahead, as most members seem focused on the labor market rather than inflation, except for Stephen Miran, who voted for a larger cut. If the Bank of Japan’s expected rate hike is successful, it could add another layer to the potential for currency adjustments by central banks shortly, aimed at strengthening their respective currencies.
Technical Levels to Watch
On the daily chart, gold futures appear ready to fall further despite testing a record high of $3744 on Wednesday. They are currently trading at $3670 after breaking below a key support at the 9 DMA at $3690. The next support level to watch is the 20 DMA at $3596, where a breakdown could lead to testing the 50 DMA at $3576. A close below this level could cause a steeper decline, especially if geopolitical concerns do not provide more support during this week., gold futures look ready to slide further despite testing a record high at $3744 on Wednesday, currently trading at $3670, after piercing a significant support at the 9 DMA at $3690, and could test the next support at the 20 DMA at $3596 where a breakdown could push the futures to test the next significant support at the 50 DMA at $3576 before this weekly closing as the fall could be steeper if the geopolitical concerns find no more boosting doze during this week.
In a 1-Hr. Chart, Gold futures experienced an extremely volatile move just after the Fed’s interest rate decision on Wednesday, from $3744 to $3679, exactly as I had predicted in my last analysis that support at the 200 DMA at $3688 after the formation of bearish crossovers as the 9 DMA, 20 DMA have come below the 100 DMA while 50 DMA looks ready to pierce the 100 DMA too, indicating the currently prevailing selling to continue till this weekly closing.
Disclaimer: Readers are expected to take any position in gold at their own risk, as this analysis is based only on observations.
