Gold Price Forecast: XAU/USD flirts with $2,150 amid US Dollar broad sell-off

XAU/USD Current price: $2,142.98

• Federal Reserve Chairman Jerome Powell testified before Congress, repeated a well-known message.
• Wall Street reverted Tuesday’s losses, while government bond yields stayed on the back foot.
• XAU/USD trades near fresh record highs and has room to extend its advance.

Spot gold trades near  $2,150.00 a troy ounce, a record high mid-US afternoon. The bright metal surged despite a better market mood at the US Dollar got some hits from different fronts. On the one hand, the Canadian Dollar soared after the Bank of Canada (BoC) announced its monetary policy, leaving the benchmark rate unchanged at 5% as widely anticipated.

On the other hand, Federal Reserve (Fed) Chairman Jerome Powell testified about the Semi-Annual Monetary Policy Report before the House Financial Services Committee, repeating the policy rate is likely at its peak and adding policymakers consider it would be appropriate to dial back the monetary policy “at some point this year.” Powell clarified that the Fed is not yet ready to trim rates.

Wall Street reverted Tuesday’s losses, and the three major indexes trade in the green, with the Nasdaq Composite leading gains, up 1.11%. At the same time, Treasury bond yields edged further lower. The 10-year note currently offers 4.10%, its lowest in a month.

XAU/USD short-term technical outlook

XAU/USD is up for the sixth consecutive day, and extreme overbought conditions have become more notorious, but there are no other signs of upward exhaustion in the daily chart. Technical indicators continue to edge higher, albeit with decreased momentum. At the same time, the bright metal advanced further above its moving averages, with the 20 Simple Moving Average (SMA) gaining bullish traction above the longer ones and far below the current level.

In the near term, however, according to the 4-hour chart, there is room for additional gains. The Momentum indicator resumed its advance after correcting extreme overbought conditions, while the Relative Strength Index (RSI) indicator also regained the upside and currently stands at 84. Finally, the 20 SMA heads north almost vertically, currently at around $2,110, reflecting continued buying interest.

Support levels: 2,128.40  2,119.90 2,110.40  

Resistance levels: 2,150.10 2,165.00 2,180.00