Gold Price Forecast: XAU/USD defends key $2,470 support, with eyes on Powell speech

old price holds Thursday’s late rebound this Friday, eagerly awaiting Powell’s Jackson Hole speech.
The US Dollar returns to the red with Treasury bond yields on dovish Fed bets and the USD/JPY sell-off.
Gold price remains poised to reclaim $2,500 on dovish Powell’s words and bullish technicals.

Dhwani Mehta FXStreet

Gold price is back in the green zone early Friday, adding on to Thursday’s late rebound. The Gold price rebound could be linked to the resumption of the US Dollar (USD) decline, in the face of fresh USD/JPY sell-off and negative US Treasury bnnd yields.

Gold price looks Powell's speech for a fresh advance

Markets stay risk averse in Asian trading so far this Friday, as they keenly await US Federal Reserve (Fed) Chair Jerome Powell’s Jackson Hole appearance for fresh hints on the central bank’s interest-rate path, especially with traders pricing in aggressive Fed rate cuts on signs of loosening labor market conditions.

Risk-off flows boost the haven demand for the US government bonds, weighing on the Treasury bond yields across the curve and thus, dragging the USD lower. The Greenback also bears the brunt of the renewed USD/JPY sell-off, following Bank of Japan (BoJ) Governor Kazuo Ueda’s hawkish remarks before the parliament on Friday.

Ueda reaffirmed his commitment to raise interest rates if inflation stayed on course to sustainably hit the 2.0% target but remained wary about unstable financial markets.

Despite the latest upswing, Gold price looks set to book the second straight weekly loss, as a Fed interest-rate cut for September is a done deal. However, Fed Chair Jerome Powell’s comments are critical to gauging the magnitude of easing expected in the coming months.

Gold price corrected roughly 1% on Thursday after the US Dollar rebounded firmly from over one-year lows against its major rivals, as risk sentiment deteriorated on unimpressive US S&P Global business PMIs and Jobless Claims data. Further, traders resorted to repositioning in the lead-up to Powell’s Jackson Hole showdown on Friday.

Gold price technical analysis: Daily chart

The short-term technical outlook for Gold price remains in favor of buyers so long as the triangle resistance-turned-support, now at $2,470, holds.

Note that Gold price yielded a symmetrical triangle breakout last week while the 14-day Relative Strength Index (RSI) points north above 50.

These technical indicators suggest that the bullish potential remains well in place for Gold price.

On the upside, should Gold buyers recapture the record high of $2,532, the next relevant topside target is seen at the $2,550 level.

Acceptance above the latter could challenge the $2,600 round level en-route to the triangle target, measured at $2,660.

If the Gold price correction resumes, the immediate support is seen at the abovementioned triangle resistance-turned-support at $2,470.

A breach of the latter will call for a test of the. Further south, the $2,450 psychological barrier will come to the rescue of Gold optimists.

Economic Indicator

Fed's Chair Powell speech

Jerome H. Powell took office as a member of the Board of Governors of the Federal Reserve System on May 25, 2012, to fill an unexpired term. On November 2, 2017, President Donald Trump nominated Powell to serve as the next Chairman of the Federal Reserve. Powell assumed office as Chair on February 5, 2018.

GBP/USD gains as easing Fed hike bets weigh on US Dollar

GBP/USD continues its winning streak for the ninth consecutive day, trading around 1.3390 during the Asian hours on Tuesday. The currency pair rises as the US Dollar faces headwinds as market participants scale back expectations for Federal Reserve rate hikes this month and in September.

EUR/USD extends the range play above 1.1400 as Hormuz risks support USD

The EUR/USD pair extends its sideways consolidative price move during the Asian session on Tuesday, though it manages to hold comfortably above the 1.1400 mark. Moreover, spot prices remain well within striking distance of a nearly two-week high, touched last Thursday.

Gold extends pullback from $4,200 as eyes turn to Fed Minutes

Gold attracts sellers for the second straight day and drops to the $4,125-$4,124 region. Crude oil prices edge higher amid renewed tensions in the Strait of Hormuz, reviving inflationary concerns, and in turn acts as a tailwind for the US Treasury bond yields and a key factor driving flows away from the non-yielding yellow metal.

Bitcoin loses steam around $63,000 – DeFi tokens rally

Bitcoin sustains above $63,000 at press time on Tuesday, upholding a streak of six consecutive days of gains despite Strategy selling 3,588 BTC on Monday. The broader crypto market sentiment holds while DeFi tokens such as DeXe and LayerZero emerge as top gainers over the last 24 hours.

The US Dollar just beat the Swiss Franc at its own safe-haven game

As the king among safe havens, the Swiss Franc is supposed to benefit from geopolitical shocks such as the Iran war. This time, it didn’t. The Swissie is nearly 6% below January’s peak against the USD after a sharp decline that came along with the war in Iran and the closure of the Strait of Hormuz.

Kevin Warsh offers no policy clues: Why markets still got their answer

Financial markets came to Sintra looking for clues about the Federal Reserve's (Fed) next move. They largely left with confirmation that Fed Chair Kevin Warsh intends to make those clues much harder to find.