As investors feared, gold trading went through a turbulent moment towards the end of the week starting with the announcement of the interest rate decision at the FOMC meeting early this morning.
The Federal Reserve (Fed) increased interest rates by 75 basis points for the third time in a row, thus seeing the US dollar strengthen after the meeting.
However, the European session this evening was shocked by the report of the Japanese government's intervention in the market (intervention) which also gave a boost to the current gold trade.
On the XAU/USD price chart which measures the value of gold against the US dollar, the price was initially seen to jump when the reaction to the FOMC meeting saw the price jump briefly from the level of 1654.00 to a height of 1688.00.
But towards the end of the New York session, the price began to show a decline again, continuing to the Asian session today following the strengthening of the US dollar.
After returning to hovering at the 1655.00 support zone before a price rebound occurred in the European session.
Following Japan's intervention in the currency market, the value of the Yen strengthened while the US dollar weakened, giving room for gold to rise.
A break above the Moving Average 50 (MA50) barrier on the 1-hour time frame on the XAU/USD chart could be an early signal for a bullish trend change again for gold trading.
The barrier zone at 1680.00 will be tested if the price of gold makes an increase before the price that passes the zone will then head to the 1700.00 zone.
However, if there is another drop, the 1655.00 support zone will be tested again before the continued drop will record the latest 2-year low.
The target for the latest lows for gold's decline is seen to be around 1640.00.
