The decline was due to the strength of the US dollar after the optimistic speech of Federal Reserve Chairman Jerome Powell. Federal Reserve Chairman Jerome Powell said the economy looks positive ahead of next year. Powell added that the signs point to strong growth next year.
Accordingly, the sentiment led to a strong rise in the price of the US dollar and increased optimism in the markets. The statement also comes on the heels of disappointing retail sales on Tuesday and a sudden rise in consumer prices last week. Investors were concerned about the potential impact of rising inflation on the US economy, but Powell's comments allayed those concerns.
With the bank's decision, US stocks fell, and bond yields rose after the Federal Reserve indicated that it may start easing its massive support for the economy earlier than previously thought. The S&P 500 fell 22.89, or 0.5%, to 4,223.70 after the Federal Reserve unveiled a highly anticipated set of expectations by policy makers, which showed that some expect short-term interest rates to rise half a percentage point by late 2023. He started talking about the possibility of slowing down his bond purchases each month to keep long-term interest rates low.
In the US bond market, the yield on the 10-year Treasury rose to 1.55% from 1.50% late Tuesday. The two-year yield, which moves closely with expectations for Fed policy, rose to 0.20% from 0.16%.
Gold technical analysis: In the near term and according to the performance on the hourly chart, it appears that the price of XAU/USD has recently made a sharp bearish breach from forming the ascending channel. This indicates a sudden change in market sentiment from bullish to bearish. Gold price is now moving into oversold areas on the 14-hour RSI. As such, the bears will be looking to extend the current decline towards $1,788 or lower to $1,766. On the other hand, the bulls will target potential short-term bounces around $1,843 and $1,868 an ounce, respectively.
In the long term and according to the performance on the daily time frame, it appears that the price of XAU/USD has breached forming a sharp ascending channel. The price of gold has now fallen near the 100-day moving average. It also approached oversold areas on the 14-day RSI. Accordingly, the bulls will target potential bounces around $1899 or higher at $2000 an ounce. On the other hand, the bears - the bears - will look to capitalize on the pullback momentum by targeting profits around $1,711 or lower at $1,607, respectively.
