Gold Prices Forecast: XAU/USD Dips Amid Dollar Rally, Eyes on Powell’s Speech

Highlights

• Gold prices dip due to U.S. dollar rally, eyes on Powell’s speech.
• Powell’s speech could sway gold between $1,900 and $1,950.
• Market in flux ahead of Powell’s anticipated remarks.

Overview

Gold (XAU/USD) prices experienced a dip on Friday due to the U.S. dollar’s rally. However, the metal is set for its most robust performance in six weeks, with all eyes on Federal Reserve Chair Jerome Powell’s impending address.

Gold’s Performance and U.S. Treasury Impact

Spot gold (XAU/USD) dropped by 0.2% landing at $1,913.90 per ounce, paralleled by U.S. gold futures declining by 0.3% to $1,942. These movements come after gold showcased a potential weekly gain of about 1.3%. This upward trajectory was influenced by a pullback in U.S. Treasury yields, propelling gold prices to a peak unseen since August 10.

Federal Reserve Stance and Market Anticipation

Thursday’s financial scene featured two Fed officials hinting at their satisfaction with the recent bond market yield surge. They also hinted at a possible stagnation in interest rate hikes. Market participants eagerly await more insights on the rate landscape from speeches by Powell and European Central Bank President Christine Lagarde at the Jackson Hole economic symposium.

Dollar’s Influence and Gold’s Path Ahead

Gold’s momentary breach of the $1,900 mark led to a surge reaching around the $1,920 area. Nonetheless, Powell’s forthcoming remarks harbor the power to either anchor gold back to $1,900 or propel it to the $1,950 mark. Concurrently, the strengthening U.S. dollar, marking its sixth consecutive weekly ascent, is hampering gold’s upward momentum by elevating costs for foreign purchasers.

Short-Term Forecast

With the U.S. dollar’s steady climb and the anticipation surrounding Powell’s speech, the market appears to be in a state of flux. The continuous dip in holdings by SPDR Gold Trust suggests a bearish undertone. However, global economic cues will dictate the final direction.

Technical Analysis

The Gold (XAU/USD) 4-hour chart shows the current price at 1913.72, just marginally below its previous 4-hour close of 1913.80. This minimal movement indicates relative stability in the short term. The price remains below the 200-4H moving average of 1936.48, suggesting a bearish trend. However, it sits above the 50-4H moving average of 1901.33, indicating recent bullish momentum. The 14-4H RSI stands at 57.36, suggesting a slightly stronger momentum as it’s above the neutral 50 mark.

While Gold is comfortably above its main support range (1893.07 to 1885.79), it’s yet to approach its main resistance area (1946.99 to 1954.88). Overall, the market sentiment appears cautiously bullish.