At 1 a.m. this morning, the U.S. Federal Reserve decided to continue cutting the benchmark interest rate by another 25 basis points, bringing the rate down to 4%.
Immediately, the market reacted strongly, and gold saw a slight increase of only $10 before a sharp drop of $90, falling to the $3,915/ounce zone.
This move shows that the Fed’s continuous rate cuts—twice in the past two months—have strengthened market confidence in the recovery of the economy. As a result, capital has started to flow out of the safe-haven asset gold and back into the stock market.
In addition, funds and investors have gradually taken profits after a series of strong gold rallies in a short period.
Therefore, in the short term, gold is expected to experience minor upward waves followed by gradual declines to stabilize its price and return to its real value.
Technical analysis:
In the short to medium term, gold prices may continue to face selling pressure and could drop to the 378x–379x range, which corresponds to the H4 support zone.
Hence, traders may consider buying around the 378x–379x levels with targets at 389x–399x, and then sell again afterward.
Trí Hùng
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