Gold Price Forecast: XAU/USD looks to Powell’s speech for a fresh directional impetus

Gold price is consolidating losses incurred so far this week,  early Wednesday, as the United States Dollar (USD) is in search of a clear directional amid conflicting US Federal Reserve (Fed) commentaries, a cautious risk tone and the recent drop in the US Treasury bond yields.

Fed Chair Jerome Powell’s speech in the spotlight

Asian traders have turned cautious, shrugging off the positive close on Wall Street overnight, as China's slowdown worries combined with the renewed decline in the US bond market keep them on the edge.

Additionally, uncertainty over the Federal Reserve’s interest rate outlook also creates a sense of nervousness, especially after mixed messages from the Fed policymakers on Tuesday. Chicago Fed President Austan Goolsbee said the US central bank’s attention will turn to how long to keep rates at their current level if that progress continues.

Minneapolis Fed Bank President Neel Kashkari was a bit hawkish, noting that the Fed may have to do more to bring inflation down to its 2% goal, given the recent spate of resilient economic data. Fed Governor Michelle Bowman noted that the central bank will likely need to raise short-term rates again.

Third-quarter US economic growth data was a "blowout performance" that warrants watching as the Fed considers its next policy moves, Fed Governor Christopher Waller said on Tuesday.

Investors now eagerly await comments from Fed Chair Jerome Powell, who is set to deliver opening remarks on Wednesday at a conference on November 8, 2023, to celebrate the centennial of the Division of Research and Statistics.

However, Powell’s Thursday appearance is likely to hold more weight, as he is expected to participate in a policy panel on “Monetary Policy Challenges In A Global Economy” at the 24th Jacques Polak Annual Research Conference.

Looking ahead, the US Dollar is likely to find support from the market’s anxiety ahead of Jerome Powell’s speech, keeping Gold buyers on the back foot. However, if the correction in the US Treasury bond yields resume, Gold price could find a temporary reprieve after two straight days of losses.

All in all, the Fedspeak and the US bond market action will continue to play a pivotal role in the dynamics of the Gold price.

Gold price technical analysis: Daily chart

Gold price confirmed an ascending triangle breakdown after closing below the rising trendline support at $1,978 on Tuesday.

The immediate cushion is now seen at the bullish 21-day Simple Moving Average (SMA) at $1,961. A daily close below the latter will initiate a fresh downtrend toward the $1,950 psychological level. Ahead of that, Gold buyers could find a static support of the $1,963 level.

However, the 14-day Relative Strength Index (RSI) indicator still remains above the 50 level, suggesting that dip-buying could emerge in Gold price at lower levels.  

Gold buyers need a sustained move above the triangle support-turned-resistance line at $1,984 for a meaningful recovery. Further up, Monday’s high of $1,993 will be challenged.

The next relevant upside barrier is envisioned at the $2,000 threshold.

(This story was corrected on November 8 at 08:33 GMT to say that the Gold price is consolidating losses incurred so far this week,  early Wednesday, not Tuesday)