Gold prices experience a retreat from modest intraday gains, reaching around the $2,049-2,050 range, and trending towards the lower end of the daily range in the early European session on Thursday. The climb of the US Dollar (USD) to its highest point since December 13, fueled by the Federal Reserve’s less dovish stance on interest rates, acts as a headwind for the precious metal. Despite this, geopolitical uncertainties, particularly the potential escalation of military actions in the Middle East and China’s economic challenges, may provide some support to the safe-haven appeal of gold. The ongoing decline in US Treasury bond yields also contributes to limiting the downside for the non-yielding metal. Traders are closely monitoring events such as the flash Eurozone CPI print, the Bank of England’s policy decision, and US macro data for market direction.
In the aftermath of the Federal Reserve meeting, where no changes to the main interest-rate target were made, gold found support as the Fed signaled a potential approach towards rate cuts. Fed Chair Jerome Powell mentioned that rate cuts might commence later in the year but strongly opposed expectations for such moves in March. The less dovish outlook contributed to the USD reaching a fresh Year-to-Date peak, leading to intraday selling around gold and pushing it towards the lower end of its daily range.
Investors remain concerned about the deepening conflict in the Middle East and China’s economic slowdown, providing a backdrop of support for gold. The European Union is considering launching a naval mission in the Red Sea to protect cargo ships from Houthi rebel attacks. A private-sector survey indicates steady growth in China’s manufacturing sector for the third consecutive month in January.
Looking ahead, traders are attentive to flash Eurozone consumer inflation figures, the Bank of England’s policy decision, and the US ISM Manufacturing PMI for potential market cues. From a technical standpoint, gold could find support near the 100-day SMA around the $2,030 region. A breakthrough beyond the $2,040-2,042 supply zone could trigger bullish momentum, with resistance levels around $2,065-2,066 and the YTD peak. Conversely, a break below the 50-day SMA near $2,030 may lead to support levels at $2,012-2,010 and psychological support at $2,000, potentially shifting bias in favor of bearish traders. Further downside could expose the 100-day SMA near $1,980 before targeting the crucial 200-day SMA around $1,965-1,964.
US Dollar price today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the .
USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
USD | -0.07% | -0.06% | -0.03% | -0.06% | -0.23% | -0.35% | 0.04% | |
EUR | 0.08% | 0.01% | 0.02% | 0.03% | -0.12% | -0.27% | 0.12% | |
GBP | 0.07% | -0.01% | 0.01% | 0.02% | -0.13% | -0.28% | 0.11% | |
CAD | 0.03% | -0.01% | 0.00% | 0.01% | -0.14% | -0.29% | 0.12% | |
AUD | 0.06% | -0.03% | -0.02% | -0.01% | -0.16% | -0.30% | 0.12% | |
JPY | 0.22% | 0.14% | 0.14% | 0.12% | 0.15% | -0.16% | 0.24% | |
NZD | 0.34% | 0.30% | 0.30% | 0.32% | 0.30% | 0.12% | 0.40% | |
CHF | -0.04% | -0.12% | -0.10% | -0.08% | -0.10% | -0.26% | -0.40% |
FED FAQS
What does the Federal Reserve do, how does it impact the US Dollar?
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates.
When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money.
When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
How often does the Fed hold monetary policy meetings?
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions.
The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
What is Quantitative Easing (QE) and how does it impact USD?
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system.
It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
What is Quantitative Tightening (QT) and how does it impact the US Dollar?
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.