XAU/USD sustains above $1,830 as yields plunge despite hawkish Fed

  • Gold price is holding itself above $1,830.00 despite a 75 bps rate hike by the Fed.
  • Solid economic growth in the US economy has facilitated the Fed to announce a 75 bps rate hike.
  • The 10-year US Treasury yields have eased 5.50% on a mega rate hike by the Fed.

Gold price (XAU/USD) has to witness a firmer rebound after hitting a low of $1,815.00 in the late New York session as the Federal Reserve (Fed) dictated a 75 basis point (bps) rate hike after its two-day policy discussion meeting. Fed chair Jerome Powell went beyond his words, took 75 bps into the consideration, and featured the same in the monetary policy decision.

As per the market consensus, a rate hike by 50 bps was expected, however, fresh prints of the US Consumer Price Index (CPI) reported last week, forced the Fed policymakers to move beyond the estimates and elevate the interest rates vigorously. Although various of jobs are facing the headwind higher inflation, their unsteady economic strength and inability to generate significant job opportunities are not providing them much room to stretch their benchmark rates. As per Fed Powell’s speech, the US economy is very strong and is well-positioned to handle tighter monetary policy.

Meanwhile, the 10-year US Treasury yields have plunged 5.50% and have settled at 3.9% on Wednesday. The US dollar index (DXY) has surrendered the psychological support of 105.00 and has slipped to near 104.60. A significant fall in the DXY and yields has supported the gold prices.

Gold technical analysis

The gold prices are attempting to balance above the supply zone placed in a narrow range of $1,831.70-1,833.88 on an hourly scale. The gold bulls have attacked the 200-period Exponential Moving Average (EMA) at $1,839.18 and a violation of the same will strengthen the precious metal. Meanwhile, the Relative Strength Index (RSI) (14) has shifted into a bullish range of 60.00-80.00, which adds to the upside filters.

Gold hourly chart

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