XAU/USD whips on Fed outlook, sticking with $1,940

• Gold takes a rocky path to $1,940.00 on Fed reaction, decides to walk down on Fed rate call.
• Fed outlook sees inflation slightly higher than predicted and holds steady on rates.
• XAU/USD waffled on market reaction, recovery rally fails to extend.

The XAU/USD slipped to $1,940.00 after the Federal Reserve (Fed) held benchmark interest rates at 5.5% for the time being. The Federal Open Market Committee (FOMC) released their inflation expectations looking forward, seeing inflation a little bit higher than it previously forecast.

Fed Chair Jerome Powell took the podium to outline the Fed’s position in a speech shortly after the rate call, and his overall tone kept Gold prices bolted to their initial reaction levels.

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Jerome Powell speaks on policy outlook following the decision to hold interest rate steady

Fed dot plot points to one more 25 bps hike in 2023 and 50 bps cut in 2024

According to the Fed’s ‘dot plot’, the Summary of Projections (SEP), the US central bank is still on pace to deliver one last 25-basis-point hike in 2023. The median of Fed officials sees the official Fed funds rate at 5.1% by the end of 2024.

Fed Chair Jerome Powell reiterated the Fed’s dedication to achieving their long-term 2% inflation target. While Chair Powell noted that the Fed is very likely to be near the top of the rate hike cycle, but reaffirmed that the Fed will base its future decisions on data.

XAU/USD technical outlook

Gold prices initially ramped up during the pre-Fed Wednesday trading session, lifting from the day’s opening near $1,931.00, reaching a peak of $1,947.00, just beneath the $1,950.00 critical level.

The XAU/USD swamped out following the Fed, declining to the $1,940.00 level before staging a profit-taking rally that ultimately failed to recover the day’s high, and Gold is set to decline further from $1,940.00 if buyers remain on the sidelines.

On daily candlesticks, Gold saw a clear rejection from the 100-day Simple Moving Average (SMA), and current price action is seeing support from the 200-day SMA currently floating up to $1,925.00.

XAU/USD daily chart

XAU/USD technical levels