The Fed's interest rate is currently at its highest level in 22 years

After gold rose, it was unable to exceed $1985 and subsequently declined

By Raed Alkhedr | @raedalkhedr | 27 July 2023

  • Interest rates were raised by 25 basis points

  • Jerome Powell stated that monetary policy is yielding positive results as the US economy expands moderately

  • Gold failed to surpass the resistance level of $1985

Events and economic data affecting the movement of the US dollar and gold

Gold prices saw an increase for the third consecutive session at the start of the day, benefiting from the decline of the US dollar index following the end of the Federal Reserve's meeting and comments from Jerome Powell. These comments reinforced the basic expectations about the end of the current US interest rate hike cycle.

In this context, the Federal Reserve's monetary policy committee decided to raise interest rates by about 25 basis points to a range of 5.25% - 5.50%, the highest in 22 years, in line with market expectations. The Fed is resuming its monetary tightening path after a temporary pause during the June meeting, with this increase being the eleventh in the last 12 meetings.

The Federal Reserve stated in its monetary policy statement that the increase approved during this meeting is part of its efforts to curb inflation rates, which are still far from the bank's targeted levels despite the slowdown.

Federal Reserve Chairman Jerome Powell stated during the press conference that monetary policy is bearing fruit as the US economy expands moderately. This is evidenced by stable unemployment data at a low level, as well as moderate consumer spending increases. Powell added that inflation in the United States is slowing but still high above the target level, which necessitated another interest rate hike during this meeting. Powell explained that the risks facing the US economy could affect employment and consumer spending, requiring accurate monitoring of data in the next phase to maintain a balance between reducing inflation rates and achieving moderate growth.

As for trading, the precious metal started today's trading with a limited decline, trading near the $1956 per ounce level.

The most important pivot and technical levels that may affect gold movements

After rising successfully at the beginning of today's session to test the $1984 resistance level, gold failed to exceed this level and quickly declined from it, now trading around the $1956 level.

It is likely that the decline will extend to test the $1950 support level. If this support level is broken, the decline may further extend to the $1930 support level.

However, if gold manages to maintain the $1950 support level and rebounds from it, there is a possibility of testing the $1970 resistance level. Should it break above this level, the rise may continue to test the most important resistance level around $1984. Breaking through this level could potentially contribute to further gold gains, leading to a test of the $2000 resistance level. If this level is also surpassed, gold's ascent could extend to the $2020 level.

GOLD 7-27-2023