Gold prices experienced a sharp decline following the Federal Reserve’s recent policy meeting. The central bank’s decision to maintain its benchmark interest rate and its indication of prolonged high rates throughout the next year led to a significant increase in the value of the U.S. dollar.
The Fed‘s suggestion of a possible additional rate hike later in the year further contributed to the dollar’s surge, affecting global markets and exerting downward pressure on gold prices.
The ICE U.S. Dollar Index (DXY) rose by 0.5%, reaching 105.67, marking its highest level in over six months. This dollar strength had a cascading effect on U.S. equity futures and played a pivotal role in pushing down gold prices.
Gold had been on an upward trajectory toward $1,950 before the Federal Reserve’s decision, aligning with previous highs earlier in the month. However, despite initial optimism, all the gains made prior to the announcement were erased, resulting in gold ending the trading day in negative territory.
The prevailing trend for gold appears to be a downward one, with concerns that it may revisit the lows from last week, around $1,900. The extent of this decline will largely depend on how traders interpret and respond to the Federal Reserve’s interest rate projections.
