Fed Holds Hawkish Stance as Gold and Silver Prices Remain Stable

The Federal Reserve maintained its hawkish stance on keeping interest rates unchanged, and gold and silver prices remained stable ahead of the September meeting.

Jesse Colombo, an independent precious metals analyst, noted that gold broke out of a triangle pattern in an upward direction, contrary to previous predictions of a sharp drop to $3,000 per ounce. He believes that gold needs to decisively break above the $4,100/ounce mark to consolidate the uptrend and surpass the resistance zone of $4,300-$4,600/ounce to confirm that the correction phase has ended.

Congruent with Colombo's view, Natixis economists Christopher Hodge, John Briggs, and Selin Aker stated that the Fed's decision was aimed at delaying market pricing of its policy until after more inflation data is available. The next CPI report will be released on August 12th, while the market currently still assesses about a 60% chance that the Fed will raise interest rates by another 25 basis points at the September meeting.

Marc Chandler, managing director of Bannockburn Global Forex, described the Fed's decision as a 'hawkish stance on keeping interest rates unchanged.' However, each time Fed Chairman Kevin Warsh reaffirmed his commitment to controlling inflation, short-term bond yields and the US dollar tended to weaken. As a result, gold prices rebounded strongly after the Fed's decision.