Gold Price Forecast: XAU/USD awaits Fed Chair Powell’s speech for a fresh directional impetus

Gold price is holding onto minor bids early Wednesday, struggling to build on the previous bounce, anticipating a fresh batch of top-tier US economic data releases and Federal Reserve (Fed) Chairman Jerome Powell’s speech.   

Gold price looks to US ADP data and Powell for fresh cues

Tuesday’s US JOLTs Job Openings data indicated a stronger-than-expected labor market after rising to 7.744 million in the reported period. Data surpassed the expected 7.48M increase. The upbeat labor data from the US briefly lifted the US Dollar (USD) across the board, capping the Gold price rebound near $2,655.

However, Gold buyers retained control as the Greenback failed to sustain the uptick. The data failed to alter the market’s expectations of a 25 basis points (bps) interest rate cut by the Fed later this month. Markets are currently pricing at a 73% probability of a Dec Fed rate reduction, the CME Group’s FedWatch Tool shows, more or less the same as a day ago.

In Wednesday’s trading so far, Gold price is struggling to extend its upside as the USD remains in demand due to a risk-averse market environment. China’s economic concerns and US-Sino trade tensions continue to dent risk sentiment. China’s Caixin Services PMI unexpectedly dropped to 51.5 in November against the expected increase to 52.5 following October’s 52.0 figure.

On Tuesday, China’s Commerce Ministry announced a ban on exports of dual-use items related to gallium, germanium, antimony and superhard materials to the US with immediate effect, in response to the latest crackdown on China's chip sector by US President Joe Biden's administration.          

If risk-aversion intensifies, Gold price could face a tailwind effect as it is considered a traditional safety net. However, the next directional move in Gold price hinges on the US ADP Employment Change data and Fed Chair Powell’s speech. The US private sector is expected to see a job gain of 150K in November, compared to 233K in October.

A worse-than-expected labor data could revive expectations of future Fed rate cuts beyond December, fuelling a fresh advance in the non-interest-bearing Gold price. But any reaction to the US data is likely to be shorted-lived as Powell’s words are set to shape up the market expectations of the Fed’s easing trajectory, influencing Gold price action in the lead-up to Friday’s US Nonfarm Payrolls data.

It’s worth mentioning that it will be Powell’s last appearance before the Fed enters the ‘blackout period’ on December 7 ahead of the December 17-18 policy meeting.

Gold price technical analysis: Daily chart

The daily chart shows that Gold's price extends its struggle with critical short-term 21-day Simple Moving Average (SMA), now at $2,636.

The 14-day Relative Strength Index (RSI) sits listlessly beneath the 50 level, indicating a lack of clear directional bias.  

However, the previous week’s Bear Cross warrants caution for Gold buyers.

Therefore, Fed Chair Jerome Powell’s words are likely critical for the next directional move in Gold price.

Recapturing the 21-day SMA support-turned-resistance at $2,636 is critical for buyers to revive the recovery momentum.

The next relevant resistance aligns at the 50-day SMA at $2,669, above which the $2,700 level will be in sight.

On the downside, Gold sellers need to crack the $2,621 static support to challenge the previous week’s low of $2,605.

A sustained break of that level could expose the 100-day SMA at $2,579.