Powell hints at 2 more hikes, sends gold lower Powell hints at 2 more hikes, sends gold lower
The US dollar rose on Wednesday after the gathering of central bank leaders worldwide, which included Federal Reserve Chair Jerome Powell. During the meeting, Powell left open the possibility of the Federal Reserve implementing two more rate hikes this year. Furthermore, Powell stated that he does not anticipate inflation reaching the Federal Reserve's target of 2% until the year 2025.
However, investors might be hanging onto the words of Powell a little too tightly considering his central bank counterparts in the ECB and BoE presented more hawkish remarks (natural for the stickiness of inflation that these regions are facing). Christine Lagarde emphasized that the European Central Bank (ECB) remains unconvinced by the available evidence inflation is falling in the Euro Area. A revision by investors might be in order.
With the rise in the USD, we are also seeing selling pressure in the XAU/USD for a third straight day.
Currently, gold is hovering around $1,909 and maintaining a bearish outlook, with the potential to breach the $1,900 level. The daily chart reveals that the precious metal has dropped further below both the 20 and 100 Simple Moving Averages, which are currently converging at $1,943.
Among the current levels, $1,875 perhaps stands out as the most significant support level. Despite previously acting as a resistance point, it has served as a pivot on multiple occasions.
