Gold price extended its previous losses in reaction to the FOMC meeting minutes. Even so, the precious metal remained within the week-long range of between $1,820 and $1,850 per ounce. The extent of the Fed’s hawkish stance will be apparent during its March meeting. Prior to that, it will likely be subject to curbed gains even as the bulls remain in control.
FOMC meeting minutes
The Fed meeting minutes released on Wednesday indicated that most of the central bank’s officials approved a slower pace of interest rate hikes by 25 basis points. The move was aimed at allowing the Fed to efficiently “determine the extent” of its subsequent hikes.
Even so, the officials were in agreement that inflation remains high. As such, they are of the opinion that the environment warrant further interest rate hikes until inflation gets to the bank’s target of 2%. Granted, a few officials were in favor of higher rate increases.
The extent of Fed’s hawkish stance will likely become more precise during its next meeting on 15th – 16th March. Prior to that, gold price may remain subject to curbed gains as the US dollar rebounds. However, optimism that an endpoint to Fed’s current pace of rate hikes is approaching will continue to offer support to the commodity.
Gold price outlook
Gold price extended its previous losses in reaction to the FOMC meeting minutes. Indeed, the minutes pushed the precious metal further below the crucial level of 1,850. Since dropping past this zone about a week ago, the bulls have failed to attract enough buyers to retest it.
As at the time of writing, gold price was down by 0.46% at 1,825.99. As seen on its daily chart, it remained between the 200 and 50-day exponential moving averages. Based on these technical indicators, coupled with the fundamentals, I am cautiously bullish on the asset. For as long as it continues to trade above the 200-day EMA, the bulls will remain in control.
In the ensuing sessions, I expect the precious metal to continue finding resistance along the 50-day EMA at 1,855.96. Indeed, the bulls will need to gather enough momentum to break this resistance if they are to have an opportunity to retest the upper target at 1,872.09.
On the lower side, 1,820 remains a support level worth watching in the short term. Past that zone, the bulls will be keen on defending the psychologically crucial level of 1,800, which is along the long-term 200-day EMA.