Gold Price Forecast: XAU/USD buyers appear unstoppable on Trump’s anti-Powell campaign

Gold price keeps its record run intact above $3,450 early Tuesday after posting a 3% gain on Monday.
Trump’s attacks on Fed’s Powell and fears over the US’s financial stability continue to power Gold price rally.
Gold price could see a brief pullback as the RSI enters a heavily overbought region on the daily chart.

Dhwani Mehta FXStreet

Gold price extends its record run into the second consecutive day on Tuesday as buyers refuse to give up yet while keeping their sights on the $3,500 threshold.

Gold price keeps rallying on Trump again

Just as the US-China trade war-led US recession fears weren’t enough to sap investors’ confidence, US President Donald Trump doubled down on his criticism of Federal Reserve (Fed) Chairman Jerome Powell since last Friday, negatively impacting the already beleaguered US Dollar (USD), lifting the traditional safe-haven and the USD-denominated Gold price.

Trump continued his verbal attacks on Powell, raising concerns about the central bank's independence, prompting investors to show no confidence in the US currency. Trump noted on Monday that the US economy is headed for a slowdown "unless Mr. Too Late, a major loser, lowers interest rates NOW.”

Responding to Trump’s criticism, the Fed whisperer and Wall Street Journal’s (WSJ) Nick Timiraos said, "Trump is signalling that he will blame the Federal Reserve for any economic weakness resulting from his trade war if the central bank doesn’t cut interest rates soon. “In the process, he might also be seeking to delegitimize the historically independent institution in a way that could undermine its effectiveness,” Nick added.

Despite the latest uptick in the US Dollar, this narrative remains a constant threat while rendering positive for the go-to safety bet – the Gold price.

Looking ahead, Gold price could see a brief correction as traders will likely cash in on their longs, positioning for the notable US earnings on the docket this week, including Magnificent Seven members Tesla and Alphabet, and a host of high-profile industrials such as Boeing etc.

However, any dip in Gold price could be seen as a good buying opportunity as the US-China trade war escalation and worries over the Fed’s independence will continue to haunt markets.

Gold price technical analysis: Daily chart

Any corrective declines in Gold price could be justified as the 14-day Relative Strength Index (RSI) remains heavily overbought, currently near 79.

If Gold sellers manage to fight back control, Gold price could initially retreat toward the $3,400 mark, below which the previous day’s low of $3,329 will be tested.

Further south, the April 18i low of $3,284 will likely come to the rescue of buyers.

On a sustained uptrend, Gold price targets the $3,500 barrier, above which the $3,550 psychological level will challenge bearish commitments.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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Why is Crude Oil priced for a reopening the ships haven't made?

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Why is Crude Oil priced for a reopening the ships haven't made?

Fourteen vessels crossed the Strait of Hormuz on Tuesday. Before the war, the count ran near 120 a day. In the sessions since the waterway was publicly declared open, Brent has drifted back to $87 and West Texas Intermediate (WTI) to $81, both a little lower again on Wednesday, with daily momentum on each unwound from the top of its range in late July to the low twenties now.