The Federal Reserve’s (Fed) September meeting is over, and we can now assess the consequences of Kevin Warsh’s hawkish move. The medium-term outlook for XAUUSD is under pressure due to monetary tightening.
Yesterday, the US central bank reached a consensus and raised interest rates by 25 basis points to the 3.75%–4.00% range, defying market hopes for policy easing. This marked the first such step since 2023.
Several other important details from the September meeting warrant a closer look:
Overall hawkish sentiment. 16 out of 18 Fed members anticipate at least one more hike by the end of the year, with a potential target range of 4.1%–4.4%. The regulator emphasized that inflation remains sticky, while the robust labor market gives policymakers room to tighten monetary conditions.
Strong headwinds for gold. As a non-income-generating asset, the precious metal is likely to face further struggles after the recent rate hike and surging 10-year US Treasury yields, which are now above 5%.
Once the Fed’s verdict was delivered, spot gold was crushed, testing local lows. The picture is unlikely to change in the coming weeks: bullion prices will be under pressure. That said, there are several long-term pillars of support, such as huge geopolitical risks in the Middle East (including the Iranian conflict), US fiscal imbalances, and ongoing gold purchases by global central banks to diversify away from the dollar. These factors could limit XAUUSD’s downside.
The overall recommendation is to sell gold. Profits should be taken at $4,000. Stop Loss could be set at $4,550.
Always size the position so that your potential loss (protected by a Stop Loss order) is no more than 1% of your account balance. If you cannot open a position that meets such a risk criterion, it is safer to skip this trade and wait for a better, lower-risk opportunity.
This content is for informational purposes only and is not intended to be investing advice.
