Prior to the Fed’s meeting today, gold traded in an uninspired $7 range during the overnight and early NY trading sessions. Traders were clearly on the sidelines and had trimmed positions ahead of the FOMC. Once the Fed meeting finally started at 11 AM PST though, participants returned to the market and gold shot up 1%.
The Federal Open Market Committee decided to not raise interest rates and had dovish overall remarks. The recent financial turmoil in China, amongst other global economic and financial market developments, appeared to be the main reason for the Fed’s decision to keep US monetary policy steady. The immediate reaction to the interest rate hold was that the USD and treasury yields fell while US equities and the precious metals jumped higher. Near term resistance for gold is coming in at the 100 day moving average of $1,152.50. Should the market lose steam tonight, bids will likely materialize ahead of the 50 day moving average at $1,118.50.