Gold Price Forecast: XAU/USD declines after the Fed held rates steady

• XAU/USD declined to $1,980 after the decision and is down by 0.25% on the day.
• The Fed decided to hold rates steady at the 5.25%-5.50% range.
• US Treausry yields are declining, which may limit the metal's losses.
• The bank remains data-dependant and left the door open for another hike.

In Wednesday’s session, the Gold Spot price declined towards $1,980, seeing 0.25% gains after the Federal Reserve (Fed) decision to hold rates at the 5.25%-5.50% range. The bank pointed out that it is still data-dependent and that it will take into account tighter financial conditions and the cumulative effects of the monetary policy for its next decisions.

Following the decision, the US Treasury bond yields, often seen as the opportunity cost of holding gold, declined after the decision, which could limit the downward movements of the metal for the rest of the session. The 2-year yield fell below 5.00% while the 5 and 10-year declined rates to 4.70% and 4.90%, respectively. On the other hand, the US Dollar, measured by the DXY index, is still up on the day, trading at 107.00, up by 0.20%.

Focus now shifts to Chair Powell’s presser for investors to look for further clues on the following decisions.
  

XAU/USD Levels to watch 

The daily chart suggests a neutral to a bearish outlook for the short term for the yellow metal’s price as buyers show signs of exhaustion after hitting overbought condition last week. That being said, the 20-day Simple Moving Average (SMA) is about to perform a bullish cross with the 200-day average, which would limit potential losses by acting as a strong support.

 Support levels: $1,960, $1,950, $1,930 (20-day and 200-day SMA convergence)

 Resistance levels: $2000, $2015, $2030.

XAU/USD Daily Chart