Gold price hit a fresh record high earlier on Thursday as the markets digest May’s Fed interest rate decision and the related FOMC policy statement. Even with the subsequent easing, the Fed’s dovish stance is set to continue supporting the precious metal in the ensuing sessions.
An environment of low interest rates tends to boost gold price; an aspect that’s evident in its recent movements. On Thursday, the metal hit a new record high after signs that the US central bank may pause on its rate hikes as from June.
As expected, FOMC raised rates by 25 basis points from the prior range of 4.75% – 5% to that of 5% – 5.25%. However, investors’ focus was on the committee’s tone with regard to its decision in June and beyond.
In its statement, FOMC emphasized that subsequent decisions would largely be influenced by the upcoming data. With a rather dovish tone, the Fed Chair stated, “we were no longer saying that we anticipate some additional policy firming”.
The first major economic data after the Fed’s interest rate decision is the jobs data set for release on Friday. While inflation appears to have peaked, investors remain wary of the strong US labor market. Signs of a resilient labor market may yield a rebound in the US dollar while curbing gold price gains.
Gold price prediction
Gold price hit a new record high early on Thursday before pulling back. This is as the financial markets digest the Fed interest rate decision and the FOMC policy statement. As at the time of writing, the precious metal was at 2,033.31 after easing from the record high of 2,082.65.
Evidently, the bulls have been in control over the past two months. During this timeframe, the commodity has risen by over 12%; holding steady above the crucial support zone of 1,950 since mid-March. Indeed, for as long as the metal continues to trade above the aforementioned level, the bullish trend will define the gold market.
In particular, the range between the psychologically crucial level of 2,000 and the resistance level of 2,050 will be worth watching. Amid a risk-on mood, the asset may attract additional buyers and rise further towards 2,070.81.