The gold market is showing relative strength against the US dollar, which continues to trade near its highest level since 2002

In her latest research note, Nicky Shiels, head of metals strategy at MKS PAMP, said rising economic risks are helping gold find a solid low around $1,650, even as the Federal Reserve maintains its aggressive monetary stance by lowering growth forecast.

On Wednesday, after raising interest rates by another 75 basis points, US central bank economic forecasts showed that the federal funds rate will peak in 2023 at around 4.6%.

But despite the rise in interest rates, the Fed lowered its growth forecast for the US economy, suggesting its growth by 0.2% this year. And, compared with the June forecasts by 1.2%.

During the press conference, Fed Chairman Jerome Powell warned consumers that as the central bank focuses on lowering inflation, economic trouble is not far off.

Shiels noted that after Powell's press release, gold reached new weekly lows and then highs in just 45 minutes. According to her, this is "something that hasn't happened on FOMC day in a while."

Moreover, Shiels added that bearish speculative positioning can now also work in gold's favor as there has been continuous strong selling throughout most of the summer.

Gold has been so beaten up that it is becoming immune to excessive interest rate hikes by the Fed.

Since gold prices are showing a strong rebound from two-year lows, the precious metal has enough momentum to rise by $50 in the near future.

But for the full realization of the growth of gold prices, significant fundamental changes are needed.