Gold leaps to $1220 as DXY tumbles more than 1%
Gold gained more than $20 following the FOMC decisions and Yellen's remarks and refreshed its weekly high at $1220.07. At the moment, the precious metal is up 1.7% at $1219.
USD under pressure
The Federal Reserve said on Wednesday that it would hike the benchmark interest rate by 25 basis points (target range of 0.75% - 1%); a decision that was widely expected. However, the fact that the longer-run dot plot remained unchanged at 3% and only one more rate hike is forecasted for the remainder of the year triggered a USD sell-off. DXY is down 1.08% at 100.50 at the moment.
- Federal Reserve press release
Fed's Yellen said that Fed policy is not on a pre-set course, but Fed funds rate does not need to rise much to get to neutral. She also added that the basis of the rate hike is the progress of the economy and headwinds from financial crisis remain.
- Fed's Yellen: It's uncertain just how much sentiment impacts spending decisions
- Fed's Yellen: Headwinds from financial crisis remain
- Fed's Yellen: Basis for rate hike is progress of economy
- Fed's Yellen: We want confidence in economy before shrinking balance sheet
Technical outlook
A follow-through above $1222 (50-DMA) could target $1228 (20-DMA) and $1230 (Fib. 23.6% of late Dec. to late Feb. uptrend). Supports for the precious metal are aligned at $1200 (psychological level), $1195 (Jan. 19 low) and $1185 (Fib. 50% of late Dec. to late Feb. uptrend).
