Gold Price Forecast XAU/USD – Straddling Fresh 9-Month High after Powell’s Surprisingly Dovish Remarks

Gold futures are edging higher on Thursday, hovering near a nine-month high after the Federal Reserve raised its benchmark interest rate the previous day by a widely expected 25 basis points and as the Federal Reserve chief’s surprisingly dovish remarks on the central bank’s fight to bring down inflation sank the dollar and signaled that a peak in interest rates was likely approaching.

At 07:00 GMT, April Comex gold futures are trading $1972.50, up $29.70 or +1.53% and XAU is at $1956.98, up $3.86 or +0.20%. On Wednesday, the SPDR Gold Shares ETF (GLD) settled at $181.70, up $2.29 or +1.28%.

Fed Chair Powell Strikes Dovish Tone after Widely Expected Rate Hike

The Fed delivered a quarter-percentage-point rate increase on Wednesday after a year of larger hikes. However, Powell warned of further monetary policy tightening while noting the progress on disinflation, which he said was in its early stages.

Looking Ahead

Powell had a chance to sink gold prices and he didn’t take it, which means gold traders don’t believe the Fed will take any drastic steps to pound inflation lower. Moving forward, gold is likely to become more data dependent with trades paying closer attention to labor market reports, inflation data and comments from Fed officials.

Gold bulls will be paying particular attention to signs of a slowdown in the U.S. economy, which will likely greenlight an even slower pace of rate hikes by the Fed.

Daily April Comex Gold Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed on Wednesday when buyers took out the previous main top at $1966.50. A move through $1915.50 will change the main trend to down.

The minor range is $1915.50 – $1975.20. Its pivot at $1945.30 is the nearest support.

On the upside, the best target is the April 18 main top at $2039.00.

Daily April Comex Gold Technical Forecast

Trader reaction to $1970.80 is likely to determine the direction of April Comex gold futures on Thursday.

Bullish Scenario

A sustained move over $1970.80 will indicate the presence of buyers. Taking out the intraday high at $1975.20 will indicate the buying is getting stronger. This could trigger an acceleration to the upside with $2039.00 the next major target.

Bearish Scenario

A sustained move under $1970.80 will signal the presence of sellers. If this generates enough downside momentum then look for the selling to possibly extend into the minor pivot at $1945.30. If this fails then the next target is the main bottom at $1915.50.

Side Notes

A close below $1970.80 will form a potentially bearish closing price reversal top. This won’t change the main trend to down, but if confirmed, it could trigger the start of a 2 to 3 day correction.