Jakarta, GIC Trade – Gold prices traded around $1,810 an ounce on Wednesday after losing nearly 2% in the previous session, plunging back to their lowest level in more than two months as U.S. Federal Reserve Chairman Jerome Powell gave a more hawkish monetary policy outlook than the market expected.
 
Powell warned that the final interest rate could be higher than previously expected given stronger economic data. Powell also said that the central bank would be prepared to increase the pace of rate hikes if data is needed. 
 
Markets are now pricing in a 70% chance of a 50 basis point (bps) rate hike in March, according to CME's FedWatch tool, up from a 30% chance a day earlier.
 
While testifying before the U.S. Senate on Tuesday, FOMC Chairman Jerome Powell left the door wide open for a 50 basis point rate hike at the next meeting. Powell noted that they are ready to increase the pace of rate hikes if the data warrants it and trigger a rally in the US Dollar with the US Dollar Index (DXY) hitting its highest level since early November near 106.00.
 
"The latest economic data came in stronger than expected, which suggests that the final interest rate is likely to be higher than previously anticipated," Powell told the Senate Banking Committee. "If the totality of the data suggests that faster tightening is needed, we will be ready to increase the pace of rate hikes."
 
Fundamentally, Powell's hawkish statements regarding higher interest rate hikes supported the performance of the US dollar, thus putting pressure on gold prices. Then how technically, see the following analysis:
 
Technical Analysis

 
Gold prices in the 1-hour period tried to rebound to touch the resistance area of 1829.80 which can be seen from the RSI which is already in the oversold area. However, in the medium term, gold is still in a downtrend, because the MA50 line has crossed the MA100 line from above. For further bearishness, gold prices need to break through the support area at 1806.50 towards the next support level at 1792.10.
 
This analysis is a fundamental and technical view used by the author, not a suggestion or invitation. To get more information click on the image below.