Early Gains Reversed After A Hawkish Hold From The Fed

Gold is slightly weaker in the Asia-Pac session, after closing virtually unchanged at $1930.30 on Wednesday. Earlier gains were trimmed by a rebounding USD index and higher yields following the FOMC decision.

• The US Fed signalled interest rates would be higher for longer after deciding to stay on hold.
• US tsy yields spiked following the FOMC led by the front end. The 2-year yield reversed earlier declines and traded up to 5.18%, the highest level since 2006. The 10-year yield pushed to a fresh 16-year high of 4.41%.
• Fed Chair Powell said the central bank has made progress on bringing down inflation but “we are committed to achieving and sustaining a stance of monetary policy that is sufficiently restrictive to bring inflation down to our 2 per cent goal over time”.
• Updated quarterly projections showed 12 of 19 officials favoured another rate hike in 2023. The median estimate for the fed funds rate for the end of 2024 was 5.1%, up from 4.6% previously.
• Policy decisions are also expected from the Bank of England today and the Bank of Japan tomorrow.
• From a technical standpoint, the session’s high of $1947.36 easily pushed through resistance at $1939.0 (Sep 5 high) opening up the next key resistance level at $1953.0 (Sep 1 high), according to MNI’s technicals team.