Still, the bullish momentum in gold is still limited, with the dollar staying within a broader bullish trend
The Fed confirmed it will accelerate the pace of tapering, starting in January 2022. The central bank decided to leave rates on hold, and trim bond-buying by $30 billion per month. As the decision came in line with market expectations, following a short-lived rally in a knee-jerk reaction, the dollar eased nearly across the market on Wednesday, staying under a mild downside pressure today.
Against this backdrop, gold prices turned positive after a brief dip to two-month lows around $1,753. As the bullion managed to hold above the $1,750 important support, the recovery has brought the yellow metal back to the $1,785 area. Still, the bullish potential remains capped by the key moving averages that stand on the way towards the $1,800 psychological level.
As such, the bullish momentum in gold is still limited, with the dollar staying within a broader bullish trend despite the local retreat amid the buy the rumor and sell the fact activity following the Fed decision. The USD index was last seen flirting with the 96.00 figure that represents the first major target for sellers.
Now, markets shift focus towards the monetary policy announcements from the Bank of England and European Central Bank. Citing the spread in Omicron and rising Covid-19 cases across the country, the bank of England will likely refrain from a rate hike today. Meanwhile, the ECB is expected to boost its regular asset purchase program.
From the technical point of view, the XAUUSD pair needs to make a decisive break above the $1,785-$1,795 zone in order to regain the $1,800 mentioned barrier. On the downside, the $1,750 critical support remains in focus as long as the prices stay below the key moving averages.