Gold Price Forecast: XAU/USD aspires to test $1,620.00 as yields soar, Fed Powell’s speech eyed
|- Gold prices are aiming to test $1,620.00 as 10-year benchmark US yields have touched 4%.
- As inflation has not responded well to soaring interest rates, Fed Powell will to its hawkish stance.
- A roadmap for hiking the interest rates in the remaining 2022 will be discussed by the Fed.
Gold price (XAU/USD) is oscillating around $1,625.00 after dropping below the consolidation range of $1,626.83-1,632.72 in the Asian session. The precious metal is continuously declining after facing barricades above $1,640.00. The yellow metal is expected to drop to near $1,620.00 amid soaring US Treasury yields. Also, the market participants will keep the bright metal on the tenterhooks ahead of the speech from Federal Reserve (Fed) chair Jerome Powell.
Considering the responsiveness of the decline in the price pressures vs. the pace of hiking interest rates by the central bank, Fed Powell will sound hawkish and provide a roadmap of further rate hikes in the remaining 2022. In 2023, the Fed will prefer to remain data-dependent. One thing is for sure the Fed will scale down the pace of hiking rates in 2023 as the deviation between current rates and the targeted terminal rate at 4.6% is low.
Meanwhile, the ongoing fight against inflationary pressures is fueling the US Treasury yields. The 10-year benchmark has touched a high of 4% for the first time since 2010. The yields have sensed selling pressure after hitting the critical but have opened room for further upside.
Gold technical analysis
Gold prices are displaying a volatility contraction amid auctioning in a bounded territory of $1,621.46-1,649.83 on an hourly scale. An explosion in the same will result in wider ticks and heavy volume. The horizontal resistance is plotted from Sep 16 low at $1,654.17.
The 50-period Exponential Moving Average (EMA) at around $1,640.00 has acted as a major barrier for the counter. Also, the Relative Strength Index (RSI) has dropped into the bearish range of 20.00-40.00, which will trigger a downside momentum.
Gold hourly chart
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