Gold Price Forecast: XAU/USD regains the $2,900 mark amid USD weakness

XAU/USD Current price: $2,903.97

• Fed Chairman Jerome Powell testified before Congress, said nothing new to markets.
• The US January Consumer Price Index is expected to remain stable at 2.9% YoY.
• XAU/USD attracts buyers on dips, higher highs still likely.

Spot Gold peaked at $2,942.76 early on Tuesday, reaching yet another record high before giving up. The bright metal fell towards $2,880 early in the American session but quickly recovered the $2,900 mark, trading above it as the session progressed.

The US Dollar (USD) lost its recent attractiveness across the FX board despite a cautious mood that prevailed throughout the day, once again correcting lower after a strong start to the week.

Asian and European traders held cautious ahead of Federal Reserve (Fed) Chairman Jerome Powell’s appearance before Congress. Powell, who testified on monetary policy, repeated much of what he said after the January Fed monetary policy meeting. Powell said policymakers are in no hurry to adjust the monetary policy and would like to make more progress on inflation. He also added that the economy was in a “pretty good place” and refused to comment on tariffs.

His words brought some relief to financial markets, helping Wall Street to trim most of its early losses while reviving the USD's weakness.

Powell will repeat his testimony on Wednesday, although before a different commission. Additionally, the United States (US) will release the January Consumer Price Index (CPI), foreseen up by 2.9% from a year earlier, matching the December reading. The core annual advance is expected at 3.1%, slightly below the previous 3.2%.

XAU/USD short-term technical outlook

From a technical point of view, XAU/USD remains bullish, yet overbought conditions suggest a corrective decline remains likely. In the daily chart, technical indicators are retreating just modestly while still developing within extreme levels. At the same time, the bright metal remains far above all its moving averages, with the 20 Simple Moving Average (SMA) heading firmly higher, yet currently at around $2,787.34, too far below the current level to be relevant.

XAU/USD corrected overbought conditions in the near term and could resume its advance from here. The 4-hour chart shows buyers added longs in the intraday dip towards a bullish 20 SMA, now providing dynamic support at around $2,883.50. The 100 and 200 SMAs, in the meantime, maintain their strong upward slopes far below the shorter one. Finally, technical indicators corrected extreme overbought readings but turned flat above their midlines, reflecting buying interest surging on price retracements.

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

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