- Gold experienced a moderate reaction to the FOMC rate decision and is still trading below $ 1,850.
- The FOMC chose to keep the policy setting stable, as expected.
Gold prices (XAU / USD) have experienced a very moderate initial reaction to the release of the latest FOMC monetary policy decision and continue to trade just below $ 1,850, with price action still limited for now by the precious metal’s 200-day moving average, which stands at $ 1,847.79. Currently, gold prices are down a modest 0.3% or about $ 6 on the day, weighed down by the strength of the US dollar amid a broad deterioration in risk appetite.
No change in Fed policy setup
As expected, the FOMC kept rates at 0.0-0.25% and reiterated that this is where rates would hold until inflation moderately exceeds 2% for some time, such that inflation averages 2% throughout the year. time and long-term inflation expectations remain well anchored. at 2%. Meanwhile, the Fed kept pace with its monthly asset purchases at $ 80 billion in treasuries and $ 40 billion in mortgage-backed securities and reiterated that purchases would continue at this rate. The Fed reiterated that it remains committed to using its full range of tools to support the economy and that it remains prepared to adjust its policy settings accordingly if risks arise that could impede the achievement of its price and employment stability objectives. The vote in favor of keeping his policy establishment stable was unanimous.
On the economy, the Fed repeated that the pace of economic activity and employment had moderated in recent months, but apparently in recognition of the recently observed weakening in economic momentum at the end of the fourth quarter of 2020 / early January 2021, he said, noting that the weakness is mainly concentrated in the sectors most affected by the pandemic. The way forward for the economy will depend significantly on the pandemic, including progress on vaccines, the bank said. The public health crisis continues to weigh on economic activity, the bank added, and still presents considerable risks to the outlook. Finally, on inflation, the Fed noted that lower demand and previous falls in oil prices still kept consumer inflation low.
Technical levels
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