Gold Price Forecast: XAU/USD set to test $1830 amid golden cross, dovish Powell

Gold price set the stage on fire last Friday, as it climbed to the highest levels since early August at $1819 before easing slightly to finish the week at $1817. Gold price jumped nearly $25 after Fed Chair Jerome Powell’s dovish comments at the Jackson Hole Symposium smashed the US dollar to two-week troughs below 93.00 against its main peers. Although Powell acknowledged that the Fed officials discussed tapering at the July meeting, he was quick to add that the growth in employment is not there yet. Powell also raised concerns about the growing spread of the Delta covid variant while downplaying rate hike expectations. Powell’s dovish stance lifted Wall Street to fresh record highs, knocking off the Treasury yields alongside. Expectations of the Fed maintaining the monetary policy support for longer pressured the US yields, benefiting the yieldless gold price.

In the aftermath of Powell’s address, the US dollar continues to hold the lower ground amid a quiet start to the NFP week. With the UK out on a national holiday, light trading and minimal volatility could likely exaggerate the moves in gold. At the time of writing, gold price is trading around $1817, almost unchanged on the day, underpinned by the dollar’s weakness, renewed geopolitical tensions over Afghanistan and persisting covid concerns. A US official reported that as many as 5 rockets were fired at Kabul airport, although there were no US causalities, per Reuters. On the data front, US Pending Home Sales are likely to drop in later in the NA session. However, the speculation on the Fed’s taper timing and broader market sentiment will continue to play out.

Gold Price Chart - Technical outlook

Gold: Four-hour chart

Following a falling wedge breakout spotted on gold’s four-hour chart on Friday, the bulls took on the baton and almost tested the pattern target at $1825 earlier in the Asian session.

Gold price now takes a breather, allowing room for more upside towards the $1830 round figure.

Ahead of that the four-week highs of $1823 could be retested. The path of least resistance appears north for gold price amid a golden cross confirmed on the said time frame.

Golden cross flashes a bullish signal, with the 50-Simple Moving Average (SMA) having pierced the 200-SMA from below.

Adding credence to a potential move higher, the Relative Strength Index (RSI) is edging higher, sitting just beneath the overbought region.  

If the tide turns in favor of the bears, then gold price could retrace towards the August 24 highs of $1810.

Further south, the upward-pointing 21-SMA at $1800 could challenge the bearish commitments.

The last resort for gold buyers is seen at the 50 and 200-SMAs confluence around $1794.