The recent release of the minutes from the US Federal Reserve meeting has had a significant impact on the price of gold. The Fed’s policymakers expressed a notably cautious sentiment, signaling a restrained approach to monetary policy. This caution has led to a shift in market expectations regarding interest rate cuts, with the anticipated number of cuts being revised from two to just one. As a result, the US interest rate is expected to remain at 5.5% per annum for an extended period, which has diminished the attractiveness of gold as it does not yield interest.
Looking at the technical analysis of XAU/USD, we can see that the recent price action has formed a downward impulse followed by a correction. The consolidation range has been well-defined, and the market has broken out downwards, indicating the potential for a further decline. The MACD indicator on the H4 chart supports this scenario, with its signal line directed downwards towards new lows.
On the H1 chart, a decline followed by a consolidation range has been observed. The breakout from this range suggests a further decline to a local target of 2337.35. The Stochastic oscillator confirms this possibility, with its signal line poised to rise before another potential decline. These technical indicators point towards further downward movement in gold prices.
The Fed’s cautious stance on monetary policy and the expectation of prolonged high interest rates have led to a decline in gold prices. Technical analysis supports the likelihood of further declines, although corrective rebounds may occur along the way. Investors should closely monitor these levels as market conditions continue to evolve. It is important to be aware of the impact of Federal Reserve policy on gold prices and to adjust investment strategies accordingly.