Gold Prices Forecast: Powell’s Upcoming Speech Could Tip XAU/USD’s Scales

Highlights

• Dollar’s strength above 103 challenges gold’s ascent.
• Investors await crucial economic insights from Jackson Hole.
• Eyes on Powell’s speech for rate hike clues.

Gold (XAU/USD) Prices React Ahead of Central Bankers’ Gathering in Wyoming

Gold (XAU/USD) prices saw a slight reprieve from recent declines, moving off 5-month lows as the trading world awaits pivotal insights from central bankers’ gathering in Jackson Hole, Wyoming. Key discussions on economic outlooks and interest rate decisions have kept investors on their toes.

Gold Prices Rise Amidst Struggle

In early trades, spot gold (XAU/USD) advanced 0.3% to $1,892.88 per ounce, while U.S. gold futures mirrored the movement, ticking up 0.3% to $1,921.70. This positive momentum comes even as gold struggled, earlier touching a mid-March low, prompted by robust economic data fueling expectations of prolonged higher U.S. interest rates. Such rates often dampen the allure of non-yielding assets like gold.

Dollar’s Strength Challenges Gold’s Advance

In the currency realm, the dollar’s steadfast hold above the 103-mark continues to challenge gold’s progress. With global attention focused on U.S. Federal Reserve chair Jerome Powell’s upcoming speech, anticipation mounts on whether his statements will align with the recent hawkish undertones of the FOMC minutes. Notably, most economists in a Reuters poll suggest the Fed may halt further interest rate hikes, with a slight tilt towards those believing a potential cut might only emerge post-March.

Asian Markets React to China’s Moves

Rising Treasury bond yields and increasing home mortgage rates hint at a possible wane in the Federal Reserve’s enthusiasm for more hikes, especially given the softer inflation backdrop. Meanwhile, the Asian markets faced headwinds. China’s smaller-than-expected cut to lending rates left markets wanting, extending a pattern of underwhelming fiscal actions from Beijing.

Short-Term Forecast

Gold’s (XAU/USD) immediate future hinges significantly on central bank movements and sentiments. The metal’s slight recovery might be tested post-Powell’s speech, and any dovish or hawkish hints could catalyze shifts. Moreover, SPDR Gold Trust’s reported 0.3% rise, its first inflow since late July, indicates underlying investor interest in the precious metal. Gold’s trajectory remains a balancing act between global economic cues and intrinsic demand dynamics.

Technical Analysis

Gold’s (XAU/USD) current 4-hour price sits at 1889.17, slightly below the previous 4-hour price of 1892.56, indicating a minor retracement. Importantly, this price is below both the 200-4H moving average (1938.00) and the 50-4H moving average (1905.90), suggesting a bearish sentiment in the short term. The 14-4H RSI reading of 36.46 is below the neutral 50 mark, leaning towards the oversold territory, hinting at weakened momentum.

The current price is nearing the main support area, which ranges from 1893.07 to 1885.79, potentially acting as a floor for the commodity. However, considering all the technical indicators, the current market sentiment for Gold on the 4-hour chart appears bearish, but vulnerable to a near-term counter-trend retracement.