Gold Price Forecast: XAU/USD regains $2,900 amid easing fears

XAU/USD Current price: $2,903.92

• The United States Consumer Price Index was higher than anticipated in January.
• Fed Chairman Jerome Powell testified before Congress, poured cold water on market concerns.
• XAU/USD recovered roughly $40 from its daily low, showing buyers are happy adding on dips.

Spot Gold recovered from an intraday low of $2,863.61 and trades above the $2,900 mark in the mid-American session. Financial markets are quite volatile in the second half of the day after multiple key headlines coming from the United States (US).

On the one hand, the country released the Consumer Price Index (CPI), which rose by 3.0% in January compared to a year earlier.  The core annual reading printed at 3.3% vs. the expected 3.1%, while, on a monthly basis, the CPI rose 0.5%, higher than the 0.4% posted in December. All figures were above expectations, immediately triggering demand for the safe-haven US Dollar (USD) amid speculation the US Federal Reserve (Fed) will further delay any potential interest rate cut.

The XAU/USD pair fell to the aforementioned low, yet the slide was limited amid Gold’s safe-haven condition. The pair recovered as Fed Chairman Jerome Powell testified before Congress. Powell tried to put things back in balance by noting that the economy is “close, but not there” on inflation. Additionally, he repeated that the central bank makes its decisions based on the economy’s performance. Finally, he said that policymakers want to keep the monetary policy restrictive for now while acknowledging that it is possible officials will have to move the policy rate on tariffs.

Somehow, Wall Street managed to reverse part of its early losses with Powell, putting pressure on the USD and helping XAU/USD recover its bullish pose.

XAU/USD short-term technical outlook

From a technical point of view, the daily chart for XAU/USD shows overbought conditions persist, yet there are no clear signs of an upcoming slide. Technical indicators have turned flat within extreme levels and even aim marginally higher. At the same time, XAU/USD develops far above all its moving averages, with the 20 Simple Moving Average (SMA) heading firmly north at around $2,798.00 while far above the 100 and 200 SMAs.

In the near term, and according to the 4-hour chart, Gold is bullish. XAU/USD is advancing, breaking above a bullish 20 SMA, while the intraday dip has stalled far above a bullish 100 SMA. The Momentum indicator pared it slide around its 100 line but holds around it. However, the Relative Strength Index (RSI) indicator has already changed course and aims north at around 59, supporting another leg north.

Support levels: 2,883.50 2,872.30 2,855.45

Resistance levels: 2,911.60 2,925.00 2,940.00