- XAU/USD is eroding support at $1,900 in a 9% reversal from highs of $2,065.
- Gold soars to lows of $1,894 after Fed rate hike.
- Reaction muted after the Federal Reserve confirmed market expectations.
gold futures have spiked to new two-week lows at $1,894 per troy ounce on Wednesday following the Federal Reserve’s decision to raise interest rates by 25 basis points to 0.50%.
Gold was little changed after the Fed rate hike
The precious metal has been largely unaffected after the US Central Bank met market expectations, raising interest rates for the first time since 2018 and hinting at further hikes in the coming months.
The Fed committee agreed to raise borrowing costs, forced by the highest inflation in the last four decades and with rather bleak prospects, as the invasion of Ukraine is likely to increase inflationary pressures and derail economic growth.
Beyond that, Fed Chairman Jerome Powell has signaled a total of seven rate hikes in 2022 and pledged to lay out the plan to start cutting his $9 trillion balance sheet during the next meeting.
XAU/USD pushes against support at the $1,900 zone
The yellow metal is now pushing against the support area at $1,900 after a nearly 9% sell off from early March highs beyond $2,000.
On the downside, a successful break below $1,900 would increase bearish pressure towards $1,875 (low Feb 24) and $1,844 (low Feb 15).
Conversely, any bullish reaction should extend beyond the $1,927 intraday high before targeting $1,096 (March 11 low) ahead of the $2,000 psychological level.
Technical levels
Source: Fx Street
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