Fed statement leaves price stable in familiar range

• Gold prices are stable at critical daily support after the Fed statement.

The two-day meeting of the Federal Open Market Committee has come to an end this afternoon and the statement has been released.

This event was widely viewed as a placeholder meeting by the Federal Reserve and the market expectation was a modest aggressive stance, which is what the statement offers.

There were expectations about the recognition of inflation risks, delta risks, and discussions about fine-tuning, which is what we have from the statement.

“The economy has made progress toward targets since setting the taper bar in December and will continue to assess progress in upcoming meetings.”

Markets are now relying on Fed Chairman Jerome Powell’s words at the press conference.

Comparison of FOMC statements

The changes that are highlighted in the declaration are the following:

1. The FOMC deleted this entire line: “Progress in vaccinations has reduced the spread of COVID-19 in the United States.”

2. An addition, “Not fully recovered.”

3. The Fed “made progress” toward phase-down targets.

The changes between the FOMC meetings on June 16, 2021 and July 28, 2021 are highlighted below.

(Source: TD Securities)

The price of gold is coming under pressure as the US dollar rallies to test daily and 4-hour resistance.

15 minute gold chart

Fed statement, key statements

Reference interest rate unchanged; the target range is 0.00% – 0.25%. The interest rate on excess reserves remains unchanged at 0.15%. Fed announces launch of permanent repos facility. The Fed says that vaccination progress will likely continue to reduce the effects of the public health crisis on the economy, but risks to the economic outlook remain.

Technical analysis of gold and the US dollar

Before the event, the US dollar was looking into the abyss at trend line support as follows:

The 4-hour structure shows that the price has been reinforced to the downside by two levels of resistance structure.

The key was the highest level of resistance, as this was the apex of the correction that encountered the daily lows and neckline of the M formation as follows:

15 min chart

However, US Fed fund futures showing that the market is fully pricing at a 25 basis point adjustment by March 2023 should support the dollar compared to central bank currencies. less aggressive. This should continue to be a hindrance to gold prices in the near future.

4 hour chart

Meanwhile, for gold, the weekly chart was compelling and the prospect of a downside extension has been building for several weeks as follows:

Gold weekly chart

Daily chart support

However, daily support has been a firm obstacle for bears in the Fed event and we see little movement so far. A breakout of $ 1,790 would be significantly bearish for the next few days.