- Gold prices are steady at critical daily support post-Fed statement.
- A benign statement has left markets at a standstill, awaiting Fed’s chair presser.
Update: Having posted the heaviest daily closing in over two weeks, Gold (XAU/USD) holds onto Fed-led upside momentum around $1,808, gaining 0.10% intraday amid the early Asian session on Thursday.
The yellow metal showed no major reaction to the Federal Open Market Committee (FOMC) statement. However, the broad US dollar weakness after Chairman Jerome Powell’s press conference leased gold buyers afterward. The Fed Chief said, “Economy has made progress toward goals since setting the bar for taper in December and will continue to assess progress in coming meetings.”
It’s worth noting that the Wall Street Journal’s (WSJ) news backing the procedural passage of US President Joe Biden’s infrastructure spending bill in the Senate also favor the precious metal amid the quiet session.
Moving on, gold traders will keep their eyes on the preliminary readings of US Q2 GDP, expected 8.6% annualized versus 6.4% prior, for fresh impulse. Also important will be the stimulus updates and virus news, not to forget headlines from China as Beijing’s crackdown on IT and private education weigh market sentiment of late.
The two-day Federal Open Market Committee meeting has drawn to a close this afternoon and the statement has been released.
This event was widely seen as a placeholder meeting by the Fed and the market’s expectation was for a modestly hawkish hold which is what the statement has offered.
There were expectations of the acknowledgements of inflation risks, risks of the delta variant and discussions of tapering which is what we have from the statement.
“Economy has made progress toward goals since setting the bar for taper in December and will continue to assess progress in coming meetings.”
Markets are now hinging on the words of the Fed’s chair, Jerome Powell in the Press conference.
FOMC Statement comparison
The changes that do stand out in the statement are as follows:
1. The FOMC removed this entire line: “Progress on vaccinations has reduced the spread of COVID-19 in the United States”.
2. An addition, “Not fully recovered”.
3. The Fed “made progress” towards taper goals.
The following highlights the changes between the Jun 16, 2021 and Jul 28, 2021 FOMC meetings:
(Source: TD Securities)
Gold 15-min chart
A drop and pop back to the start again.
Fed statement, key takeaways
- Benchmark interest rate unchanged; target range stands at 0.00% – 0.25% .
- The interest rate on excess reserves is unchanged at 0.15%.
- Fed announces the launch of the standing repo facility.
- Fed says vaccination progress likely to continue to…
Go to the news source: XAU/USD stays firmer above $1,800 after Fed showdown