Gold Price Prediction: XAU/USD seeks direction following Fed-inspired volatility; US Retail Sales to be monitored

Gold price (XAU/USD) is hanging around $1,810.00 in the early Asian session after dramatic fluctuations in response to the Federal Reserve's interest rate decision and policy guidance (Fed). The precious metal fluctuated wildly within a range of $1,796 to $1,814 and is now extremely quiet as investors analyze Fed head Jerome Powell's remarks prior to making an informed decision.

The US Dollar Index (DXY) fell to a new six-month low of 103.49 as the Federal Reserve opted to proceed with a measured approach to future policy tightening. S&P500 closed Wednesday on a pessimistic note as the Fed's prediction of a higher terminal rate of 5.1% generated a danger of liquidity crunch in the economy, which may exacerbate recession risks. However, the Fed has supplied a diplomatic perspective on recession by stating, "No one knows if a recession will occur or not."

In the meantime, 10-year US Treasury rates have declined further to 3.48 percent as Fed monetary policy that is less aggressive has stimulated demand for US Treasury bonds. Thursday's release of U.S. Retail Sales figures will be closely monitored by investors moving ahead. The monthly Retail Sales data (Nov) is anticipated to decrease by 0.1% compared to the prior reading of 1.3% growth. A drop in retail demand will contribute to additional inflation data softening.