Powell's remarks stirred the market, and gold broke through the 4200 level.

The Federal Reserve as scheduled cut interest rates by 25 basis points on Wednesday, but the real trigger for the rally was Powell’s remarks at the press conference.

The Fed Chair emphasized potential risks in the labor market while clearly relaxing his stance on inflation pressures. Powell pointed out that, after adjusting for overestimations in employment data, job growth has actually been somewhat sluggish since April. He described the Fed’s current stance as “waiting and watching” — implying that there is no rush to take further aggressive action in the short term.

The market’s reaction was swift: the US dollar index (DXY) plummeted 0.6% in a single day to 98.65, marking the largest one-day decline since September. The 10-year US Treasury yield fell 3.5 basis points to 4.155%, with real yields also declining. In this environment, gold seized its moment — spot gold surged by $20.20 on Wednesday, closing near $4228.47 per ounce.

What do market participants think?

Independent metal traders are very satisfied with this outcome. After a round of profit-taking, gold prices quickly rebounded to the day’s high. From the perspective of US bank strategists, Powell was clearly more dovish this time than previously expected — especially with the shift in labor market assessment, which directly triggered a chain reaction of dollar declines.

Manulife Investment Management’s view is more straightforward: the market was initially prepared for a hawkish Fed, but Powell’s attitude unexpectedly turned dovish. This expectation gap acts like a strong tonic, boosting gold’s momentum.

What signals does the technical analysis reveal?

From the technical chart of gold, the upward trend still has room to continue. The Relative Strength Index (RSI) indicates that bullish momentum remains intact.

Analysts suggest the path: gold may first surge toward $4300 per ounce, which is the initial target after Powell’s comments. If this level is broken smoothly, the all-time high of $4381 per ounce comes into view.

On the downside, if gold falls below $4200 per ounce, the next support is around the 20-day simple moving average at $4153. Lower levels include the 50-day moving average at $4090 and the round number at $4000.

Why are Powell’s comments this time so impactful?

Looking at the decision itself, although three officials voted against, the overall policy signal has become quite dovish. Fed officials hinted that there might be another rate cut next year, with the medium-term neutral interest rate set around 3%. These figures reflect that a turning point in the interest rate cycle has been reached.

Powell shifted the focus of the rate cut cycle from inflation back to employment, and this change in signal has directly pressured the dollar — a weaker dollar reduces the opportunity cost of holding gold. Coupled with the synchronized decline in US Treasury yields, gold has received support from multiple dimensions.