Gold Gives Up, Depreciates As Fed's Hawkish Tone Dominates Market


Gold is currently hovering around the $2,300 area in early Asian trading on Thursday amid upbeat market sentiment. However, US Treasury yields fell and the USD also weakened.

For now, investors are still digesting Fed Chairman Jerome Powell's statement and the US central bank's decision to keep interest rates unchanged.

Meanwhile, data shows the US trade deficit is narrowing and the labor market remains tight.

The price of gold is currently trading at 2,300.99 which is down by 0.11% since it opened in the early trading session this morning.

Markets expect the Fed's hawkish tendency to maintain interest rates could prompt the central bank to deliver a neutral monetary policy statement and announce that it will reduce rates on its Quantitative Tightening (QT) program.

During a press conference, Jerome Powell said it would not be appropriate to cut interest rates until they are confident that inflation is heading towards the 2% target and said this year's inflation data would be difficult to cooperate with.

He also said that the Fed believes that monetary policy is capable enough to contain inflation and reject the potential increase in interest rates.

Looking from a technical point of view, gold's position is still in a difficult area even though investors seem to have failed to push the price past the highest level of $2,352 which could open the way to $2,400. Further gains were seen at the April 19 high of $2,417.

If the opposite happens, gold, which is currently in the $2,300 area, could deteriorate back to the April 23 low of $2,291. The next loss is expected to hit the daily high of March 21 which makes support at the $2,223 and $2,200 levels.