Gold Price Analysis: Despite the Hawkish Attitude of the Federal Reserve, XAU/USD Continues to Rise

• Gold rallied from a two-month low

• Fed accelerates balance sheet shrinkage, hawkish dot plot fails to allay epidemic fears, hesitation over timing of rate hikes

• The European Central Bank may signal the conclusion of the PEPP, but economic forecasts are key.

gold(XAU/USD) continued to move higher in the Asian session, benefiting from higher volatility and uncertainty over global economic growth related to inflation risks and the new COVID-19 variant Omicron.

The three rate hikes predicted in the Federal Reserve's dot plot on Wednesday were the initial catalysts for the dollar's strength, which had a short-lived impact on the price of gold. This underscored the greater urgency that Fed members felt was needed to fight inflation. However, Fed Chairperson Jerome Powell made it clear that economic data was key and that the path or rate hike was uncertain. This took all the heat out of the dot plot and the dollar suffered.

AohuiAnalysts at the platform explained: "Overall, the message from the press conference was that policymakers were trying to hold the line on inflation, but were concerned that inflation would turn out to be higher than expected."

Having said that, traders may already be concerned that the Fed may not deliver. "We still have some doubts about the Fed's resolve. Analysts at Rabobank believe that" the Fed has not delivered on its expected rate hikes for a long time. "

The next catalyst will beEuropean Central BankAny hawkish argument could be a catalyst for the dollar.

Gold (XAU/USD) prices rallied higher around $1,780, maintaining a post-Federal Reserve rally in Asia on Thursday, starting at $1,753.

Gold initially responded to the Federal Reserve's decision by going down to multi-day lows, and then forming a "buy rumor sell fact" trend. The market is today'sEuropean Central BankThe (ECB) meeting and the end-of-year consolidation of gold prices are in preparation, which could be complemented by a corrective correction.

The Federal Reserve doubled down on its $30 billion-a-month bond purchases, and the dot plot also mentions three rate hikes in 2023. However, Powell's comments such as "COVID-19 variants pose risks to the outlook" and not raising interest rates until the balance sheet reduction is complete left gold buyers with an aftertaste. It is worth noting that stimulative hopes from the United States and rising stocks also helped with the corrective pullback.

However, the market remains divided, as US Treasury yields and equity futures remain largely stable ahead of the key European Central Bank monetary policy meeting. That said, the region's central banks are ready to shut down the Pandemic Emergency Purchase Program (PEPP), but questions about asset purchase programs (APPs) and economic forecasts will be crucial for traders to watch for new impulses.

technical analysis

When the RSI line is not in line with the price movement, the RSI divergence can be determined. We can always watch whether the RSI trend line can break through smoothly, maybe this will open a trend for gold to rise. For bulls, the immediate support line near $1763 and the recent low near $1753 are the key support levels for bulls in the near future.

In addition, the 100-day moving average and the downtrend line on March 14 were around $1,783 and $1,787, respectively, limiting gold's short-term gains.

Notes:

• Due to the inevitable delay between the preparation of the strategy and its release, investors can choose to trade according to the actual situation. When the actual transaction is about 5-10 points away from the entry point of the strategy, they can start to place positions, but the stop loss or range of all strategies should be firmly implemented.

• If an investor's trade has made a profit of about 30 points, please do a good job of profit parity protection. Investors who seek stability can consider taking profits. After a profit of 60 points, the stop loss can be adjusted to a profit of 30 points to ensure that part of the profit can still be locked in when the market suddenly turns. Remember not to take a profitable trade to a loss.

• The profit-loss ratio should be set at least 1:1. Before the release of major economic data or when a risk event occurs, it is best to set protection or profit-taking if there is a profit.

• Reasonable position settings: (Default 500 timesLeverageThe maximum drawdown for a single transaction is controlled at around 10% of the capital.

1. Conservative traders can trade 1 lot for $2,000.

2. Moderate traders: $1,000 can trade 1 lot.

3. Aggressive traders: $500 can be traded for 1 lot.