Gold Rallies on Fed Decision, Then Reverses on Hawkish Sentiment
Gold futures experienced a volatile trading session on Wednesday, closing higher despite a turbulent morning. The most active August contract settled at $4,065.50, up $36.70 or 0.91% from the previous day's close.
The metal initially dipped below the psychologically significant $4,000 level as tensions in the Middle East escalated, with an Iranian missile strike targeting a US military installation. However, following the Federal Reserve's decision to hold the federal funds rate steady at 3.50%-3.75%, gold prices surged, gaining over $100 in minutes.
The rally was short-lived, as traders closely monitored Chairman Kevin Warsh's post-decision press conference, which was seen as slightly hawkish. A further $61.50 reversal in gold prices occurred between 3:00 and 4:00 p.m. ET, but buyers returned during the final hour of trading.
From a technical standpoint, gold successfully defended support at $3,960 and challenged the upper resistance trendline defined by consecutive lower highs.