Gold Price Forecast XAU/USD – Higher as Yields Retreat Following Less-Hawkish Remarks by Fed’s Powell

Gold futures are higher late in the session on Wednesday after Federal Reserve Chair Jerome Powell conveyed remarks pointing to smaller rate increases ahead. The comments drove Treasury yields and consequently the U.S. Dollar lower.

At 19:10 GMT, February Comex gold futures are trading $1773.50, up $9.80 or +0.56%. The SPDR Gold Shares ETF (GLD) is at $164.59, up $1.86 or +1.14%.

Powell Sees Smaller Rate Hikes Ahead

“Despite some promising developments, we have a long way to go in restoring price stability,” Powell said in remarks delivered at the Brookings Institution, noting that central bank moves take time to work their way into the system.

“Thus, it makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down,” he added. “The time for moderating the pace of rate increases may come as soon as the December meeting.”

Daily Swing Chart 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 $1778.50. A trade through $1752.90 will change the main trend to down.

The main range is $1910.60 to $1632.40. The market is currently testing the lower level of its retracement zone at $1771.50 to $1804.30.

The short-term range is $1632.40 to $1806.00. Its retracement zone at $1719.20 to $1698.70 is the nearest support.

Daily Swing Chart Technical Forecast

Trader reaction to the long-term 50% level at $1771.50 is likely to determine the direction of the February Comex gold futures contract into the close on Wednesday.

Bullish Scenario

A sustained move over $1771.50 will indicate the presence of buyers. If this creates enough upside momentum then look for a late session surge into the resistance cluster at $1804.30 – $1806.00.

Bearish Scenario

A sustained move under $1771.50 will signal the presence of sellers. This could trigger a retest of the main bottom at $1752.90. A trade through this level will change the main trend to down.