Gold Price Forecast: XAU/USD down but still not out as focus shifts to Powell’s speech

• Gold’s record rally stalls but buyers defend the $4,000 level following the retracement from $4,059.
• Israel-Hamas peace deal and talks of piecemeal US government reopening weigh on Gold.
• Downside seems cushioned by global political uncertainty and Fed rate cut bets.
• Gold has re-entered bullish territory on the four-hour chart, whilst the 21-day SMA holds.

Gold has managed to defend the key $4,000 level on its retracement from lifetime highs of $4,059 reached on Wednesday. All eyes now turn to a slew of speeches from US Federal Reserve (Fed) officials, including Chairman Jerome Powell, due later in the day.

Gold buyers take a breather

Gold price sustains its pullback alongside the US Dollar (USD) as the Israel-Hamas peace deal lifts risk sentiment and curbs their demand as safe-havens.

Citing US President Donald Trump, BBC News reported early Thursday that Israel and Hamas have both signed off on the first phase of peace plan.

A senior White House official said the latest truce agreement aimed at the release of hostages will be presented to the Israeli cabinet on Thursday.

Meanwhile, markets are also seeing fresh signs of hope that the US government shutdown could partially reopen. This optimism somewhat dents Gold’s appeal as a traditional store of value.

“US Senate Majority Leader John Thune is considering bringing full-year appropriations bills — such as one to fund the Pentagon and pay the military — to the floor for a vote,” he told Axios on Wednesday. Thune is looking at options for a piecemeal government reopening.

However, for now, nothing seems official and confirmed, and hence, the heightened economic uncertainty continues to put a floor on any Gold price pullbacks.

Gold also keeps drawing support from the French and Japanese political crisis, and on hopes of an expansionary fiscal era returning globally.

Increased bets that the Fed will deliver two interest rate cuts this year allow Gold to keep the downside cushioned.

Even though the Minutes of the Fed’s September monetary policy meeting showed prudence and division amongst the policymakers, markets continue to fully price in a cut at the October meeting, with the odds of another reduction in December are seen at about 80%, the CME Group’s FedWatch Tool shows.

Amid a data-sparse US docket, attention remains on the Fedspeak, with Powell set to deliver opening remarks in a pre-recorded video at the Community Bank Conference hosted by the Federal Reserve Board, in Washington DC.

Any hints by Powell on the Fed’s path forward on interest rates amid looming shutdown could fuel a significant reaction in the USD-denominated Gold price.

Gold price technical analysis: Four-hour chart

The four-hour chart shows that the 14-day Relative Strength Index (RSI) has pulled back from the extreme overbought zone to re-entered into the bullish territory, currently near 66.

The leading indicator indicates that a fresh upswing remains on the cards in the session ahead, with a retest of the all-time high of $4,059 likely. A sustained break above that will call for a test of the $4,100.

On the contrary, if the corrective downside regains momentum, Gold could test the initial support of the 21-Simple Moving Average (SMA) at $3,979, below which the 50-SMA at $3,906 could come to buyers’ rescue.

Further south, the $3,850 psychological level could act as a tough nut to crack for sellers.