US Federal Reserve sends Gold to fresh one-month lows

The United States Federal Reserve sent spot gold prices to a fresh one-month low on Wednesday, with the metal trading around $4,250 after reaching an intraday high of $4,366. This decline occurred after the Federal Open Market Committee (FOMC) announced a 25 basis-point (bps) interest rate hike, as anticipated. Despite the hike, the Fed Funds Target Range remains at 3.75%–4.00%.

The FOMC's statement indicated that inflation is still elevated, although the country's economic activity is expanding at a solid pace. The labor market report noted that job gains have kept pace with the workforce, and the unemployment rate has barely changed. Additionally, the Summary of Economic Projections suggested that at least one more rate hike would be expected before year-end, with 12 out of 18 officials anticipating a further 25 bps hike, while 4 officials expect two hikes.

Only 2 members foresee no more rate hikes this year. The dominant concern for policymakers was inflation, which they projected to reach 3.7% by the end of 2026, compared to 3.6% in June. Core inflation, meanwhile, is expected to be 3.4% versus 3.3%. Fed Chair Kevin Warsh, in a press conference, declared the decision to be the "right" one, stating that monetary conditions were not restrictive enough.

His hawkish remarks intensified speculation about the Federal Reserve potentially implementing up to two more interest rate hikes before the end of the year. The XAU/USD pair closed at $4,262 and continued to face selling pressure, trading below key support levels such as the 100-day Simple Moving Average ($4,326), the 20-day SMA ($4,442), and the 200-day SMA ($4,540).

Technical indicators further reinforced the bearish outlook. The US Dollar emerged as the strongest currency against the New Zealand Dollar, while the heat map illustrated percentage changes of major currencies against each other.