Gold Price: Key Levels to Watch with the FOMC Statement in Focus

By: Faith Maina
Faith Maina
Faith strives to break down complex developments so investors can make better informed decisions. When Faith is not immersed… read more.
on Apr 28, 2021
  • Gold price has extended Tuesday’s losses by trading at $1,764.94; down by 0.66%.
  • Investors are keen on the Fed’s tone in Wednesday’s interest rate decision and FOMC statement.
  • Rising 10-year US treasury yields are a bearish catalyst for gold price.

Gold price is down for the second session in a row as all eyes focus on the Fed interest rate decision and the FOMC statement. Besides, the market is reacting to the rising US treasury yields.

gold price

Fed Interest Rate Decision

The US central bank is expected to leave interest rates unchanged. However, investors will be keener on the Fed’s tone amid inflation concerns. To start with, investors will watch and see if the FOMC statement will acknowledge that the US economy’s rate of recovery is faster than expected. The country has had a streak of strong economic data including retail sales, employment rate, and housing starts.

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At the same time, commodity prices, including agricultural products and lumber, are on record-high. As such, the guidance of the Federal Reserve on inflation is on the minds of those looking to buy gold.  The bank’s Chair has maintained that the expected inflation will be transitory and will not warrant the tightening of its monetary policy. Furthermore, any mentioning of tapering bond purchases will have an impact on gold price.   

On Wednesday, the US dollar was up by 0.17% at 91.04. This is a reaction to the rising 10-year US bond yields, which offer support to the greenback. The yields are currently at 1.64, up from 1.55 at the beginning of the week.  

Gold Price Technical Outlook

Gold price is on a decline for the second consecutive session ahead of the Fed interest rate decision. At the time of writing, the precious metal is down by 0.66% at 1,764.94 with an RSI of 34. On a 4-hour chart, it is trading below the 25 and 50-day exponential moving averages.

With the Fed interest rate decision and subsequent FOMC statement in focus, the outlook is rather neutral. A dovish tone will be a bullish catalyst for the yellow metal. It could give the bulls in the market enough energy to push the prices to the psychological, and evasive, $1800. However, it could experience some resistance at $1795.88 before hitting the higher target.

On the flip side, if the central bank hints on tapering bond purchases or tightening the monetary policy, the bears are likely to pull the prices down to $1750. Below that point, the next level to watch out for will be $1725.20.    

gold price
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