Gold (XAU/USD) price retreats 0.21% on Wednesday as Federal Reserve (Fed) Chair Kevin Warsh said he can't call financial conditions tight, even though credit conditions have tightened.
XAU/USD remains under pressure as Warsh signals financial conditions may not be sufficiently restrictiveFed Chair Kevin Warsh said that Fed tightening shows signs it’s working, even as inflation remains elevated.
Meanwhile, higher interest rates are negative for Gold prices, despite its appeal as an inflation hedge.
Of note, analysts polled by Reuters revised their forecasts for Gold downward toward the end of 2026.
XAU/USD technical analysis: Gold consolidates within $4,000-$4,100Even though Gold formed a ‘bullish harami’ candle pattern, price action on Wednesday puts in doubt the validity of the pattern.
Gold (XAU/USD) price retreats 0.21% on Wednesday as Federal Reserve (Fed) Chair Kevin Warsh said he can't call financial conditions tight, even though credit conditions have tightened. XAU/USD trades at $4,039 at the time of writing.
XAU/USD remains under pressure as Warsh signals financial conditions may not be sufficiently restrictive
Fed Chair Kevin Warsh said that Fed tightening shows signs it’s working, even as inflation remains elevated. However, he emphasized that the committee is committed to delivering price stability and that there is no soft inflation; that there's a target of price stability, and it's 2% as measured by PCE
On Wednesday, the Fed held rates at 3.75%-4% with two dissenters, Fed Governor Lisa Cook and Cleveland Fed President Beth Hammack, who voted for a 25 basis points rate hike
The Fed acknowledged that economic activity is expanding, domestic spending “has been resilient, that productivity growth is strong and that capital investment is robust,” and productivity growth is strong. Regarding its employment mandate, the Fed noted that “Job gains have kept pace with the workforce, and the unemployment rate has changed little.”
On inflation, the central bank said it remains elevated but chose to hold off on rate hikes while gathering more information and assessing the appropriate policy stance.
Tensions between the Houthis and Saudi Arabia remain high, following an attack by the Iran-backed group in Yemen on a Saudi refinery, which pushed energy prices higher on concerns of supply disruptions.
After the Fed’s meeting, Gold traders will also eye the release of the Core Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred inflation measure, on Thursday. A hot reading and strong Gross Domestic Product (GDP) figures will cement the case for another rate hike at the December meeting.
The swaps market had priced in 21 basis points of tightening, or an 85% chance that the Fed will hike in the December meeting, according to Prime Terminal.
Meanwhile, higher interest rates are negative for Gold prices, despite its appeal as an inflation hedge.
Of note, analysts polled by Reuters revised their forecasts for Gold downward toward the end of 2026.
XAU/USD technical analysis: Gold consolidates within $4,000-$4,100
Even though Gold formed a ‘bullish harami’ candle pattern, price action on Wednesday puts in doubt the validity of the pattern. If the candle closes the day near current prices, it could open the door to some consolidation.
Momentum has shifted negatively. The Relative Strength Index (RSI) is bearish, pointing downwards, aligned with price action. Given the mixed signals, price action will remain at around familiar levels until the Fed’s decision.
On the upside, the next area of interest is a resistance trendline drawn from the September highs near $4,100. A breach of this level will expose $4,200. The next key resistance levels are the 100-day Simple Moving Average (SMA) at $4,218 and the 50-day SMA at $4,278.
If XAU/USD falls below $4,000, it could test last Friday’s low of $3,975. The next key support levels are the July 17 low of $3,959 and the year-to-date (YTD) low of $3,941.
Gold daily chart
