Gold Price Forecast: XAU/USD downside appears unabated, with eyes on Fed Chair Powell

Gold price is sitting at its lowest level in two months near $2,560 early Thursday, as buyers eagerly await US Federal Reserve (Fed) Jerome Powell’s speech for a brief respite.

Will Fed Chair Powell rescue Gold buyers?

Gold price extends its losing streak into a fifth consecutive day on Thursday, courtesy of the unabated US Dollar (USD) demand alongside the US Treasury bond yields rally.

The Trump trades-led europhoria continues to power USD buyers, notwithstanding the in-line with expectations US Consumer Price Index (CPI) data for October and a slew of speeches from Fed policymakers.

US CPI rose 2.6% annually in October, coming in higher than the 2.4% growth in September while meeting the forecast. The annual core CPI inflation steadied at 3.3% in the same period vs. 3.3% expected. Monthly figures also matched estimates.

Meanwhile, Fed officials remain wary of the inflation outlook, suggesting a cautious approach for the US central bank in the coming months.

However, the US inflation data and the Fed commentary advocated that the Fed should go for another 25 basis points (bps) interest rate cut in December. In fact, the market’s pricing for such a move next month now stands at about 83%, the CME Group’s FedWatch Tool shows, compared with around 63% seen prior to the data release.

Gold buyers fail to capitalize on dovish Fed expectations, as the Trump trades-inspired USD upsurge outweighs, exacerbating the pain in the bright metal.

Therefore, Fed Chair Jerome Powell’s speech on ‘Global Perspectives’ at an event hosted by the Federal Reserve Bank of Dallas later on Thursday remains in focus for fresh hints on the central bank’s easing trajectory in the face of the US President-elect Donald Trump’s potential inflationary policies.

Also, the focus remains on the US Producer Price Index (PPI) and Jobless Claims data, while more Fed officials are likely to take up the rostrum as attention likely returns to economic data.

Gold price technical analysis: Daily chart

As observed on the daily chart, Gold price gave up the $2,600 level on a daily closing basis on Wednesday, opening the door for more downside.

Adding credence to the bearish potential, the 14-day Relative Strength Index (RSI) points lower while well below the 50 level, approaching the oversold territory.

The immediate support is seen at the confluence of the 100-day Simple Moving Average (SMA) and the September 18 low near $2,545.

A sustained break below the last will initiate a fresh downtrend toward the $2,500 threshold, with the next bearish target seen at the September 4 low of $2,472.

If Gold price attempts a rebound,  the $2,600 mark will challenge the bearish commitments. Acceptance above that level will extend the recovery toward the November 13 low of $2,619.

Further up, the 50-day SMA at $2,651 will offer stiff resistance to Gold buyers.