Gold Price Forecast: XAU/USD set to test 200-day SMA at $1,935, Powell eyed

• Gold price licks its wounds but remains vulnerable ahead of Fed Chair Powell’s speech.  
• US Dollar struggles with US Treasury bond yields amid a mixed market sentiment.  
• Gold price eyes 200-day SMA amid ascending triangle breakdown and bearish RSI.  

Gold price is licking its wounds while flirting with a three-week low just below the $1,950 level early Thursday. The United States Dollar (USD) is trading broadly subdued amid the ongoing decline in the US Treasury bond yields and a mixed market sentiment. All eyes now remain on US Federal Reserve (Fed) Chairman Jerome Powell’s speech later in the day.

Gold price awaits  Fed Chair Jerome Powell’s speech

Powell is expected to participate in a policy panel on “Monetary Policy Challenges In A Global Economy” at the 24th Jacques Polak Annual Research Conference. His comments on the policy outlook will have a significant impact on the US Dollar valuation, and hence, on the USD-denominated Gold price.

The recent commentaries from the Fed officials have been mixed, raising uncertainty on whether the Fed is still on track to deliver one more rate hike. However, the Fedspeak continues to support the higher interest rate for a longer view, keeping the Gold price on the losing end, despite the ongoing sell-off in the US Treasury bond yields across the curve.

The US Treasury bond yields extended their losing streak after the US Treasury auctioned off $40 billion of 10-year notes at 4.519% as against the 4.61% rate seen previously.

Meanwhile, the upswing in Wall Street, following a string of positive earnings reports, capped the US Dollar recovery but Gold price failed to capitalize on it, as the sentiment around the bright metal was led by the Fed expectations. Further, a rally in the Euro on hawkish comments from the European Central Bank (ECB) policymakers and expectations of falling energy prices added to the weight on the US Dollar.

In Thursday’s trading so far, investors turned risk-averse after the softer Chinese inflation data. The official data showed October Consumer Price Index (CPI) dropped 0.2% YoY in China, more than the 0.1% fall expected. Producer Price Index (PPI) declined 2.6%, slightly smaller than the expected decline of 2.7%.

Gold traders await the weekly Jobless Claims data from the US and Powell’s speech for a fresh trading impetus. If Powell sticks to the less hawkish stance, Gold price could see a much-needed reprieve. However, the Gold price weakness could extend if the Fed Chair refrains from providing any cues on the interest rate outlook.

Gold price technical analysis: Daily chart

Gold price extended the downside, confirmed by the ascending triangle breakdown, having breached the critical 21-day Simple Moving Average (SMA) at $1,964 on a daily closing basis. The 14-day Relative Strength Index (RSI) indicator is testing waters just beneath the 50 level, suggesting that the tide may have turned in favor of Gold sellers.

The immediate cushion is now seen at the horizontal 200-day SMA at $1,935, below which the confluence of the 50- and 100-day SMAs near $1,925 will come into play. A daily close below the latter will initiate a fresh downtrend toward the October 16 low of $1,908.

To attempt a recovery, Gold buyers to recapture the 21-day SMA at $1,964 on a sustained basis. The next relevant upside barrier is seen at the triangle support-turned-resistance line at $1,987. Further up, Monday’s high of $1,993 will be challenged.