Gold's Reversal: Analyzing the Fed's Surprise Move

The gold market's movements last night were unpredictable and far from simple. After hitting a new historical peak of $3,707.40/oz, gold unexpectedly turned around and fell to $3,681.39/oz, despite the Fed cutting interest rates by 0.25% as expected! So, what exactly happened?

Fundamental Analysis: The Fed's Decision and Powell's "Cold Shoulder"
Rate Cut as Expected: The Fed cut interest rates by 0.25%, marking the first reduction this year after three cuts in 2024. This move, along with the forecast for two more cuts this year, met market expectations and initially sent gold soaring.

USD and Bond Yields Fell: Lower interest rates weaken the USD and reduce bond yields, making gold more attractive. This was the initial reason for gold's new peak.

Powell's "Hawkish" U-Turn: Everything changed when Fed Chair Jerome Powell spoke. He made surprisingly "hawkish" comments, suggesting the Fed doesn't need to rush its rate cuts and that today's action was just a "risk management" move.

The Aftermath: This statement poured cold water on expectations for a more aggressive rate-cutting path. Powell was clever—he both met market expectations and appeased political pressure (especially from the Trump administration), but he also kept investors in a state of caution and uncertainty. As a result, bond yields and the USD bounced back, putting selling pressure on gold.

Outlook: This shock might be temporary. Fundamentally, the Fed's start to a loosening cycle is still a positive long-term signal for gold. Gold may be impacted in the short term, but the bullish trend remains intact.

Technical Analysis: Volatility and Key Levels

Gold showed unpredictable swings after the news. After a quick drop to the $363x area, it bounced back very quickly. This shows that buying power at strong support levels is still robust.

Key Support: $3624, $3612, $3600, $3584, $3569

Resistance: $3667, $3675, $3686, $3700

Today's Key Level: The $364x range. If gold holds above this level by the end of the European session, we will favor long positions for the US session.

Trading Setups (Strict Risk Management is Advised):

Buy Scalp
Zone: $3639 - $3637
SL: $3633
TP: $3642 - $3647 - $3652 - $3657 - $3667

Buy Zone
Zone: $3606 - $3604
SL: $3596
TP: $3614 - $3624 - $3634 - $3644 - $3664

Sell Scalp
Zone: $3674 - $3676
SL: $3680
TP: $3671 - $3665 - $3660 - $3655 - $3645

Sell Zone
Zone: $3686 - $3688
SL: $3696
TP: $3678 - $3668 - $3658 - $3648 - $3628

Note: The market is highly volatile. Be cautious with every trade. Will gold continue its rally or correct further? Share your thoughts below! 👇

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