Gold Price Forecast: XAU/USD drops after Fed keeps interest rates unchanged

• The XAU/USD pair fell to $1,980 following the decision and has lost 0.25% on the day.
• The Fed decided to maintain portfolio values ​​in the 5.25%-5.50% range.
• US Treausry yields are declining, which could limit metals’ losses.
• Banking continues to depend on data and left the door open to another rise.

In the session on Wednesday, the price of Gold fell towards $1,980, with an advance of 0.25% after the decision of the Federal Reserve (Fed) to maintain rates in the range of 5.25%-5.50%. The Fed said it remains data-dependent and will take into account tightening financial conditions and the cumulative effects of monetary policy in its next decisions.

Following the decision, US Treasury yields, often considered the opportunity cost of owning gold, fell following the decision, which could limit the metal’s downward moves for the remainder of the session. The 2-year Yield fell below 5.00%, while the 5-year and 10-year rates fell to 4.70% and 4.90%, respectively. On the other hand, the US dollar, as measured by the DXY index, continues to rise on the day, trading at 107.00, up 0.20%.

Attention now turns to Chairman Powell’s press conference as investors look for more clues on the next decisions.

XAU/USD Levels to watch

The daily chart suggests a near-term neutral to bearish outlook for the yellow metal price as buyers show signs of exhaustion after reaching overbought conditions last week. That said, the 20-day SMA is about to make a bullish crossover with the 200-day average, which would limit potential losses by acting as strong support.

Support levels: $1,960, $1,950, $1,930 (convergence of the 20-day and 200-day SMAs).

Resistance levels: $2000, $2015, $2030.

XAU/USD Daily Chart