The price of gold fell sharply after the U.S. Federal Reserve announced plans to end asset purchases and start with three interest rate hikes in 2022. The price of gold fell to the $ 1,753 level, then quickly returned to the $ 1,785 level as of this writing, as the markets valued exactly what was announced. Gold futures are struggling to maintain their gains after the Fed announced plans to end its pandemic-era asset purchase program in March and start raising prices three times interest rate in 2022.
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The price of gold has fallen more than 7% since the start of 2021 to date. As for silver, the sister commodity of gold, it also fell and reached the level of $ 21.645 per ounce. The price of white metal has fallen 19% this year.
The Federal Open Market Committee (FOMC) wrapped up its two-day policy meeting in December on Wednesday. The rate-setting authority said it would accelerate its decline efforts and end the entire asset purchase program by March. The US central bank is also expecting three rate hikes next year to help curb price inflation that has been high for 39 years. The Fed raises interest rates twice in 2023 and two more the following year.
At the Fed press conference, Powell said he expects inflation to approach the institution’s target by the end of the year, adding that the Fed will use its tools. to fight against rising inflation if it becomes a constant component of the economy. Gold prices fell on the strength of the dollar as the US dollar index (DXY) rose to 96.86, and as you know, bigger profit is bad for commodities at price. dollar because it makes them more expensive for foreign investors to buy.
Yields in the US Treasury market were also higher, with the yield on 10-year bonds reaching 1.474%. One-year yields hit 0.287%, while 30-year yields hit 1.856%.
In other metals markets, copper futures fell to $ 4.192 per pound. Platinum futures fell to $ 896.10 an ounce. Palladium futures fell to $ 1,559.50 an ounce.
The current move is important for the bulls, especially if the price of gold moves to test the psychological resistance of $ 1,800. The performance on the daily chart is at an important level for the bulls as it stimulates more gold buying, and hence a move towards the resistance levels $ 1818, $ 1827 and $ 1845, which would again confirm the strength of the uptrend. On the other hand, unless gold receives enough momentum to move closer to the $ 1775 support, expectations of a rise may temporarily evaporate, and gold will drop to the 1752 support level. $ which it recorded yesterday after the US Federal Reserve’s announcement.
I still prefer to buy gold at all bearish levels.
The gold market will be affected today by the strength of the US dollar and the extent of risk appetite, as well as the reaction to the announcement of the European Central Bank’s monetary policy decisions, the Bank of England and the Swiss Central Bank.