As expected, the Federal Reserve kept interest rates unchanged, marking the fifth consecutive time it has maintained the federal funds rate at its current level. The post-meeting statement, similar to that in June, reiterated that inflation remains above the Committee’s 2% target, partly due to supply shocks leading to price increases in certain sectors, including energy, and reaffirmed its commitment to price stability.

While keeping rates unchanged, three officials voted against raising rates, all three voting for a quarter-point increase. Fed Chairman Warsh noted that despite the disagreement, policymakers engaged in a healthy internal discussion, expressing greater confidence that the Fed team is fully capable of winning the battle against high inflation. The continued presence of Fed officials voting for a rate hike reflects the unpredictable path for US inflation to return to target levels. After market digestion, it is likely that the Fed will raise rates in its remaining three policy meetings this year, and this move is expected to weigh on gold prices.

If US crude oil prices continue to rebound in the short term, this upward pressure on oil prices should strengthen investors’ concerns that the Federal Reserve needs to raise interest rates to curb inflation. This will be a significant reason why gold prices lack support at high levels.

A short position can be established around $4,141, with a short-term target of $4,039 for profit-taking and a stop-loss at $4,161.

Gold Price 1-Hour Chart:

Ferris Kwok

Chief Analyst
Success Finance Group

Email: ferris.kwok@successfn.com