May 30, 2024

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Gold Price Forecast: XAU/USD buyers stay hopeful above $1,900 as Fed Chair Powell’s speech loom

6 min read
  • Gold Price signals the first weekly gain in five despite firmer US Dollar.
  • Overall softer yields, mixed concerns for “higher for longer rates” and China-linked anxiety fuel XAU/USD price.
  • Federal Reserve Chairman Jerome Powell’s speech eyed to confirm Fed policy pivot and can propel Gold Price on acceptance.
  • A slew of other central bankers’ speeches, mid-tier United States data will be helpful for clear XAU/USD guide.

Gold Price (XAU/USD) seesaws around the weekly top while marking $1,916 as a quote during early Friday’s Asian session, despite fading the bullish bias on late Thursday. Even so, the yellow metal prepares to snap a four-week losing streak as markets await Federal Reserve (Fed) Chairman Jerome Powell’s speech at the Jackson Hole Symposium for further directions, especially amid recently mixed United States data.

Thursday’s US statistics again troubled the traders as the headline numbers came in weak but the details were impressive and justified the Fed’s hawkish bias. However, the mixed Fed talks at Jackson Hole and the likely negative weekly close of the US Treasury bond yields, as well as mixed concerns about China, seem to put a floor under the Gold Price even as the firmer US Dollar prods the XAU/USD bulls.

Gold Price remains sturdy on the week despite firmer US Dollar

Gold Price stays on the front foot, edging higher of late, while bracing for the first positive week in five as risk-on mood joins a pullback in the United States Treasury bond yields. In doing so, the XAU/USD ignores the firmer US Dollar, as well as receding optimism about the US-China ties.

The risk appetite remains firmer, despite recent anxiety, as the US data flashes mixed outcomes and challenges the hawkish bias about major central banks. Adding strength to the upbeat sentiment, as well as a likely increase in the Gold demand, could be China’s readiness for more stimulus to defend the world’s second-biggest economy, as well as one of the top XAU/USD customers, from witnessing a hard landing.

On Thursday, US Durable Goods Orders for July marked the biggest slump since April 2020 by posting -5.2% MoM figure versus -4.0% expected and 4.4% prior growth (revised). However, the Durable Goods Orders ex Transportation marked a positive surprise with 0.5% figures versus 0.2% market forecasts and previous readings. Further, the Nondefense Capital Goods Orders ex Aircraft also improved to 0.1% while matching the analysts’ estimations compared to -0.4% marked in June.

Additionally, the Chicago Fed National Activity Index for July improved to 0.12 from -0.33 prior whereas the Kansas Fed Manufacturing Activity Index for August was 12.0 versus -20.0 previous readings.

It’s worth noting that the weekly figures of the Initial Jobless Claims and Continuing Jobless Claims eased and signaled positive employment conditions.

Not only the upbeat details of the US data but hawkish comments from former St. Louis Federal Reserve President James Bullard also underpinned the US Dollar’s post-data rebound. “The reacceleration could put upward pressure on inflation and thus makes it impossible for the Fed to start cutting rates anytime soon,” said Fed’s Bullard in an interview with Bloomberg.

While Bullard was hawkish, Federal Reserve Bank of Philadelphia President Patrick Harker teased an end of rate hike trajectory whereas Boston Federal Reserve President Susan Collins defended a “higher for longer” bias for rates.

Earlier in the week, downbeat readings of the top-tier economies’ Purchasing Managers Index (PMI) for August renewed concerns about the sooner end of the major central banks’ hawkish monetary policy cycle, which in turn triggered the risk-on mood and favored the Gold Price.

Elsewhere, the upbeat performance of the US technology shares also underpins the market’s optimism and favors the XAU/USD buyers despite a firmer US Dollar.

Alternatively, US-China optimism appears to fade as the Chinese Commerce Ministry said in a statement on Thursday, “China will state its stance on economic and trade matters of concern,” while adding that they will push financial institutions to expand credit to businesses.  China’s Commerce Ministry also called on the US to cancel potential arms sales to Taiwan, which in turn flagged fears of geopolitical tension when US Commerce Secretary Gina Raimondo visits Beijing next week.

Amid these plays, the US Dollar Index (DXY) remains firmer around the highest level in 11 weeks while the benchmark US 10-year Treasury bond yield prints mild weekly losses despite rising to the highest level since 2007 earlier in the week, as well as posting firmer closing the previous day.

Additionally, the Wall Street benchmarks closed in the red after an initially positive start as the Fed talks and United States data teased policy hawks.

To sum up, the Gold Price regains the buyer’s attention ahead of the top-tier data/events but the reversal of a five-week-long bearish trend needs strong fundamental support.

Fed Chair Powell’s speech is crucial for XAU/USD

Although XAU/USD bulls brace for a positive week, it all depends upon how well Federal Reserve (Fed) Chairman Jerome Powell manages to defend the hawkish policy amid fresh calls for the end to the “higher for longer” rates. The early signals have been mixed and Analysts at the ANZ said, “We do not think there will be early rate cuts from the Fed as an extended period of strong growth will skew the risk towards higher interest rates. It will be imperative to watch incoming data closely in coming weeks for the likely impact on the future policy path.” The same prods the Gold buyers.

Apart from Fed Chair Powell’s Speech, European Central Bank (ECB) President Christine Lagarde’s statements will also be important as they could indirectly affect the US Dollar and the Gold Price in turn.

Additionally, the mid-tier clues for the US consumer sentiment and inflation conditions will also decorate the calendar and may keep the Gold traders busy.

Overall, an absence of firmer data has already teased the Gold buyers but hawkish central bankers may reverse the XAU/USD jump.

Gold Price Technical Analysis

Gold Price holds onto the bullish signal, flashed earlier in the week via an upside break of a monthly descending trend line, as traders brace for the week’s top-tier events. Adding strength to the upside is an upward-sloping support line stretched from Monday, as well as a clear break of the 100-SMA.

Furthermore, the bullish signals on the Moving Average Convergence and Divergence (MACD) indicator, as well as the upbeat conditions of the Relative Strength Index (RSI) line, placed at 14, also keep the XAU/USD buyers hopeful.

With this, the Gold Price upside past the immediate hurdle, namely the 38.2% Fibonacci retracement of the July 20 to August 21 fall around $1,925, appears imminent.

However, a convergence of the 200-SMA and the 50% Fibonacci retracement surrounding $1,940 becomes a tough nut to crack for the XAU/USD bulls afterward.

Following that, the 61.8% Fibonacci retracement near $1,948, also known as the “Golden Ratio”, will be the last defense of the bears.

Alternatively, a downside break of the weekly support line, close to $1,910 at the latest, precedes the $1,900 threshold to restrict the immediate downside of the Gold Price.

In a case where the Gold Price remains bearish past $1,900, the resistance-turned-support line stretched from late July, near $1,878 by the press time, will be the final battle to fight for the bulls.

Overall, the Gold price upside appears impulsive but the bulls need fundamental support to retake control.

Gold Price: Four-hour chart

Trend: Further upside expected

ADDITIONAL IMPORTANT LEVELS

OVERVIEW
Today last price1916.92
Today Daily Change1.32
Today Daily Change %0.07%
Today daily open1915.6
TRENDS
Daily SMA201920.82
Daily SMA501932.42
Daily SMA1001960
Daily SMA2001908.66
LEVELS
Previous Daily High1920.43
Previous Daily Low1897.34
Previous Weekly High1916.29
Previous Weekly Low1885.13
Previous Monthly High1987.54
Previous Monthly Low1902.77
Daily Fibonacci 38.2%1911.61
Daily Fibonacci 61.8%1906.16
Daily Pivot Point S11901.82
Daily Pivot Point S21888.03
Daily Pivot Point S31878.73
Daily Pivot Point R11924.91
Daily Pivot Point R21934.21
Daily Pivot Point R31948

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