Gold Price Forecast: Will Powell help XAU/USD close the week above $2,050?

Gold price is back in the green early Friday, snapping a corrective decline from six-month highs of  $2,052 seen Thursday. The renewed weakness in the United States Dollar (USD) and the US Treasury bond yields is boding well for Gold price, as the focus shifts toward the US ISM Manufacturing PMI data and US Federal Reserve (Fed) Chair Jerome Powell’s dual appearances later in the day.

Gold price awaits Fed Chair Jerome Powell for a fresh impetus

The US Dollar has come under fresh selling pressure in Asian trading on Friday, helped by a modest downtick in the US Treasury bond yields, as traders cheer increased expectations of a Fed interest rate cut as early as March 2024. Gold price is, therefore, firming up to take on the $2,050 level once again.

The latest soft reading of the US Core Personal Consumption Expenditures (PCE) Price index data bolstered dovish Fed expectations alongside the dovish commentary from Fed policymakers. The highly anticipated Core PCE Price Index rose at an annual pace of 3.0% in October, moderating from a three-month string of 3.4% readings though still above the Fed's 2% target. On a monthly basis, the Core PCE inflation showed no growth in the reported month, missing a forecast of a 0.1% increase while down from the 0.4% print registered in September.

Meanwhile, New York Fed Bank President John Williams said on Thursday, “in balancing the risks of too-high inflation and a weaker economy, and based on what I know now, my assessment is that we are at, or near, the peak level of the target range of the federal funds rate.”

San Francisco Fed President Mary Daly noted that her "base case" does not call for any further rate hikes, though it is "too early to know" if the Fed is finished with the rate increases. Expectations of a dovish policy pivot by the Fed sent Wall Street indices higher.

Although the Asian markets struggled to capitalize on a positive Wall Street close, investors prefer to stay cautious as December kicks off and ahead of Fed Chair Powell’s speech, which will be last appearance before the Fed’s ‘blackout period’ that begins on Saturday ahead of the December 12-13 policy meeting.

Gold traders will closely scrutinize his words to judge whether the speculation surrounding the Fed rate cuts has some ground. Powell is likely to maintain his rhetoric stance that further tightening remains on the cards if the progress on inflation stalls.

In the meantime, Gold price will continue to draw support from a surprise expansion in the Chinese Caixin Manufacturing PMI data for November. China is the world’s top Gold consumer.

On Thursday, Gold price extended its corrective downside, as markets resorted to profit-taking on their long positions after the recent upsurge and amid the monthly closing. The end-of-the-month flows offered a temporary reprieve to the US Dollar.

Gold price technical analysis: Daily chart

Gold price looks to have regained its upside traction, as the 14-day Relative Strength Index (RSI) indicator has eased from the overbought territory, now within the bullish zone. This suggests that there is a scope for a fresh upswing.

The 50-day SMA is looking to seek a weekly closing above the 200-day SMA, which if happens will validate a Golden Cross.

On the upside, acceptance above the multi-month high of $2,052 is set to extend the uptrend toward the $2,070 static resistance. The all-time high of $2,079 will be next on Gold buyers’ radars.

Alternatively, the immediate support is seen at Thursday’s low of $2,035, below which a test of Tuesday’s low of $2,012 will be on the cards.

Further south, the $2,000 threshold could come to the rescue of Gold buyers.