FX.co ★ XAU/USD, GOLD

Gold prices (XAU/USD) came under renewed pressure in early Asian trading on Thursday, falling to around $4,265, continuing the sell-off that followed the Federal Reserve's decision. This decline came after the Fed's historic monetary policy decision. The Federal Open Market Committee (FOMC) voted unanimously to raise the federal funds rate by 25 basis points, bringing the target range to between 3.75% and 4.0%. This is the first interest rate hike by the Fed since July 2023, highlighting the need for policymakers to curb persistent price pressures. In the closely watched press conference following the meeting, Federal Reserve Chairman Kevin Warsh reiterated his concerns about inflation, noting that annual price increases for a wide range of goods and services had exceeded 3% over the past six and twelve months, a trend he deemed unacceptable. Warsh explicitly stated that the possibility of further increases in borrowing costs in the coming months remains, which would lead to an immediate rise in the dollar's value and severely impact non-income assets such as gold. Michael Gabin, chief US economist at Morgan Stanley, highlighted this shift toward a more hawkish monetary policy, suggesting that if the Federal Reserve chairman believes current monetary policy is supportive, the Fed has more to do, thus confirming market expectations of continued monetary tightening. This radical shift in monetary policy immediately sparked political friction, with US President Donald Trump publicly demanding that the Federal Reserve cut interest rates sharply to 1% or even lower, leading to a risky confrontation between the White House and the independent Federal Reserve. While ongoing institutional tensions and broader geopolitical uncertainty might, in theory, stimulate demand for safe havens, Commerzbank analysts emphasize that these defensive flows are currently being met with strong macroeconomic headwinds. Specifically, rising US Treasury yields and a stronger dollar continue to undermine safe-haven support, limiting gold's ability to benefit from this trend. Commerzbank also points out that domestic market dynamics, such as the higher inflation in precious metal jewelry prices in India compared to core inflation indicators, highlight the complex interplay between regional physical demand and global monetary pressures. Technically, the daily chart shows that the (XAU/USD) price remains well below the 100-day moving average and the 20-period simple moving average of the Bollinger Bands, maintaining a short-term downtrend. While momentum indicators are not strong—the 14-day Relative Strength Index (RSI) is hovering around 42—they reflect continued downward pressure rather than a complete market collapse. On the upside, initial technical resistance lies at the 100-day moving average around $4,325, with the middle Bollinger Bands forming stronger resistance around $4,440, and the upper Bollinger Bands extending to around $4,685. All of these resistance levels must be decisively broken to reverse the current downtrend. On the downside, short-term support rests primarily on the lower Bollinger Bands around $4,200, which could act as a key barrier; if selling pressure intensifies, bargain hunters may target this level.