The Federal Reserve decided to keep interest rates unchanged at its September interest rate meeting, and Powell said a rate increase may be possible at the November or December monetary policy meeting. He also mentioned that inflation has shown some signs of easing, but there is still a way to go back to the 2% target, which will be maintained until inflation continues to decline and reaches the target. His hawkish speech undoubtedly suppressed the rebound of gold, causing the price of gold to open higher and then move lower that day. 

Although the Fed kept interest rates unchanged, it took a more hawkish stance and is expected to raise rates again before the end of the year. The question that many investors are currently concerned about is how long the Fed will keep interest rates at this high level. However, other macro factors also affect gold prices in addition to Fed policy. Against the backdrop of high inflation, some investors believe gold can still serve as an inflation hedge. Although recent inflation data show signs of slowing down, price pressure has not been fully released. If inflation picks up in the future, it may once again push up gold demand. 

In addition, although holdings of SPDR Gold Trust, the world's largest gold-traded fund, are close to an eight-month low, this suggests that fund investors are less optimistic about gold in the short term. However, silver holdings have picked up recently, and some investors believe that with renewed hope in the silver demand market, gold prices are expected to rebound as well. This may indicate a gradual recovery in bullish sentiment in the gold and silver market. 

From a technical perspective, gold prices are not entirely bearish overall. At this stage, gold is hovering near the recent high after rebounding to the USD1,900 level, and continues to maintain a box-shaped range after the Federal Reserve decision. The support range below is between USD1,880 and USD1,900, and the resistance range above is between USD1,950 and USD1,960. Breaking through any range in the future will also determine the trend of gold in the next stage. Personally, I believe that the pressure to raise interest rates will only be slowly consumed by the market. The support level of 1,880 has not fallen below in one day, and the rise will only be a matter of time. Therefore, bullish investors may consider taking advantage of dips near 1,900, with a target of around 1,950 first. If it rises above 1,950, the next target is around 1,980.

Hugo Leong

Gold Analyst of Hantec Group