Fed keeps interest rates, GOLD increases but limited

After the Federal Reserve kept interest rates unchanged for the sixth time and announced it would slow down the pace of balance sheet shrinkage, gold prices rose sharply above the $2,300/ounce mark and remained above this key price level. , and also achieved the target adjusted increase in publishing the previous issue sent to you.

Market news and reviews
The Federal Reserve is determined to achieve its 2% inflation target and kept interest rates unchanged for the sixth time in Wednesday's trading session.
Fed Chairman Jerome Powell said in a news conference that cutting interest rates until they are confident that inflation is moving toward the 2% target is inappropriate, adding that this year's inflation data “does not give us greater confidence.”
They will decide monetary policy “meeting by meeting,” adding that slowing the pace of balance sheet contraction “will ensure a smooth transition in currency markets.”

Powell added that the Fed believes monetary policy will be restrictive enough to contain inflation and ignored the possibility of raising interest rates when he made the call.
The Federal Reserve has chosen to maintain the federal funds rate at 5.25%-5.50%. In their statement, they noted that the risks associated with achieving the Fed's dual mandate of focusing on employment and inflation have become more balanced over the past year.
While acknowledging progress on inflation, they also acknowledged that recent data suggests progress has stalled. The prospect of interest rates remaining fundamentally high is bad news for gold because it increases the opportunity cost of investing in gold.

However, the following news is considered the FOMC's mark when Powell said that the next step is unlikely to be raising interest rates, which also makes this press conference much less hawkish than market expectations, at least Most interest rate increases are not considered. This statement caused the Dollar to plummet and stimulated gold prices to skyrocket.

Additionally, Federal Reserve policymakers announced major changes to their balance sheet policy. Starting in June, they reduced their monthly holdings of U.S. Treasuries from $60 billion to $25 billion, marking a change in their approach to balance sheet normalization.

Macro data
ADP Jobs Change reported an increase of 192,000 jobs in April, beating estimates of 175,000 but still falling short of March's upwardly revised figure of 208,000.
Additionally, JOLTS job openings fell to 8.488 million in March, the lowest level of job openings in the report, down from 8.813 million.
US economic data continues to be mixed. Last week, gross domestic product (GDP) did not meet expectations. However, inflation data tied to the first quarter of 2024 is sounding the alarm that price trends are on the rise, which could prevent the Fed from easing policy sooner than expected.
On May 3, the U.S. Bureau of Labor Statistics (BLS) is expected to release nonfarm payrolls data for April, which is expected to be 243,000, down from 303,000 in March. Unemployment Rate is expected to remain at 3.8%, while average hourly earnings are likely to remain unchanged at 0.3% month-over-month.

Analysis of technical prospects for XAUUSD
On the daily chart, after gold received support from the 0.236% Fibonacci retracement level highlighted by readers in the previous issue, it rose to reach its target recovery level of around $2,322, along with With that, it is also limited by the technical level of 2,322 USD and maintaining price activity below EMA21.
The current price position still does not bring many positive technical prospects as gold is still in a short-term falling price channel and under main pressure from EMA21, more consistent with a short-term bearish outlook.
Overall, recovery expectations are complete and over, then in terms of the technical picture, gold has more chances to fall than to rise. As long as gold remains below the EMA21, it will remain under pressure in the short term, with price activity returning below the $2,322 level opening the way for gold prices to fall back to the 0.236% Fibonacci level.
For gold prices to increase more, it is important for it to break above EMA21, then the target level is around 2,365 USD in the short term.

During the day, gold's technical outlook leans bearish with notable technical levels listed below.
Support: 2,322 – 2,300 – 2,284USD
Resistance: 2,340 – 2,345USD

🪙SELL XAUUSD | 2343 - 2341

⚰️SL: 2347

⬆️TP1: 2336
⬆️TP2: 2331

🪙BUY XAUUSD | 2259 - 2261

⚰️SL: 2255

⬆️TP1: 2266
⬆️TP2: 2271

Comment:

🔺Spot gold prices fell sharply during trading on Thursday, erasing some of the gains achieved by the precious metal in the previous session, as a result of the strength of the US dollar and the rise in US Treasury bond yields, which coincided with a calming of geopolitical tensions in the Middle East and the decline of fears of a regional war breaking out in the region.

Comment:

Goldman Sachs economists said Wednesday they still expect two interest rate cuts this year after a “mostly quiet but peaceful” meeting of the Federal Open Market Committee (FOMC).

Comment:

Comment:

Fed's Bowman : I remain open to raising the federal funds rate at a future meeting if data show inflation progress stalling or reversing.

Comment:

The dollar declined clearly during Friday's trading, coinciding with the release of US employment data, which reinforced expectations of a US interest rate cut soon.

Comment:

The Fed has been actively combating high inflation for more than two years, with a series of interest rate increases starting in March 2022, totaling more than five percentage points. This aggressive action has been unprecedented in four decades. Although inflation has declined from its peak in mid-2022, it remains above the Fed's 2% target, which has been a key part of the Fed's policy approach since 2012.

Comment:

All current conditions are favorable for people to spend again: the unemployment rate is at a record low, wages are rising sharply and inflation is being controlled at nearly 2%. Business surveys are starting to show a glimmer of hope with the belief that it will only be a matter of time before buyers return to spending more.

Comment:

Gold rebounded to above $2,327 early in the US session

Gold rose more than 1% to above $2,327 early in the US session on a day without any notable economic data except statements from Fed officials.

Comment:

Global gold prices fell slightly during these moments of trading, today, Tuesday, as this coincides with an increase in bets that the US Central Bank will reduce interest rates later this year and an increase in demand for bullion as a safe haven in light of the ambiguity of the ceasefire in Gaza.

Comment:

Gold investors are waiting for new directional information. US weekly initial jobless claims numbers will be released on Thursday. In addition, San Francisco Fed President Mary Daly will also give a speech on the day. Dovish comments from Fed officials could limit gold price declines for the time being.