Gold Price Forecast: XAU/USD’s bullish potential appears limited despite dovish Powell

Gold price attempts a minor bounce despite a broad USD comeback.
Subdued Treasury yields lend support while dovish Powell also underpins.
Gold price wavers in a symmetrical triangle on the 4H chart, with bearish RSI.

Dhwani Mehta FXStreet

Gold price witnessed good two-way businesses on Tuesday, as the bears regained control following an earlier advance to $1790. Gold price fell as low as $1772 before reversing to $1779 at the close. Despite a minor rebound, the yellow metal finished in the red amid a sharp recovery in the risk sentiment. The much-awaited testimony from Fed Chair Jerome Powell turned out to be dovish, which eased tightening fears fuelled by last week’s hawkish surprise from the world’s most powerful central bank. Investors also cheered Powell’s dismissal of the inflation concerns, which lifted the stocks while knocking off the US dollar alongside the Treasury yields.

Gold price is looking to find its feet, trapped in a subdued trading range so far this Wednesday. The US dollar’s rebound appears to be capping the upside attempts in gold price while the recent weakness in the Treasury yields and a cautious risk tone underpins. Gold also benefits from Fed Chair Powell’s weaker rhetoric on its monetary policy and rising covid case in the Asian regions. Looking ahead, the Eurozone and the US preliminary Manufacturing and Services PMI reports will be closely eyed for fresh hints on the pace of the global economic recovery. Meanwhile, the US stimulus updates and the dynamics in the yields and the dollar will continue to remain the main driver of gold prices.

Gold Price Chart - Technical outlook

Gold: Four-hour chart

As observed on gold’s four-hour chart, the price is wavering in a symmetrical triangle formation since the Fed-led blow last week.

At the time of writing, gold price is on the verge of yielding a symmetrical triangle breakout if it closes the four-hour candlestick above the falling trendline resistance at $1785.

The next upside target awaits at $1797, the dashed horizontal trendline resistance.

Further up, the $1800 round number will threaten the bulls. If the bulls succeed in recapturing the latter, then a test of the bearish 50-Simple Moving Average (SMA) at $1818 could be inevitable.

However, with the Relative Strength Index (RSI) still lying below the midline, the bullish potential is likely to remain limited.

On the flip side, a breach of the 21-SMA at $1779 would expose the rising trendline support at $1776.

A downside breakout from the triangle could open floors towards the previous week’s low of $1766.

The last line in the sand for gold buyers is seen at the previous week’s low of $1761.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

AUD/USD keeps range near mid-0.7100s as USD bulls await US CPI

AUD/USD steadies near mid-0.7100s in the Asian session on Friday, stalling the previous day's sharp decline to an over one-week low. The August PPI report reaffirmed Fed rate-hike bets and boosted the US Dollar on Thursday, which weighed heavily on the pair. However, hawkish RBA expectations limited losses for the Aussie as USD bulls now await the release of the US consumer inflation figures before placing fresh bets.

USD/JPY holds lower ground toward 154.00; looks to US CPI

USD/JPY holds lower ground toward 154.00 in the Asian session on Friday after hot Japanese PPI data bolster a more hawkish BoJ repricing and provide fresh impetus to the Japanese Yen. However, the downside appears capped as the US Dollar preserves overnight gains ahead of the latest US consumer inflation data.

Gold bounces-off weekly lows near $4,300 as focus shifts to US CPI

Gold rebounds from its lowest level in over a week, near $4,310, in the Asian session on Friday as rising Fed rate-hike bets, bolstered by US PPI, underpin the US Dollar. Traders now look to the US CPI report for more cues about the Fed's policy path amid inflation risks stemming from higher energy prices due to the Middle East conflict. The outlook will drive the USD and influence the non-yielding bullion.

Ethereum holds above $2,400 as PPI data strengthens rate hike expectations

Ethereum (ETH) is down 0.7% on Thursday as the second-largest cryptocurrency looks to recover from earlier pressure following the release of stronger US inflation data. The Producer Price Index (PPI) for final demand rose 0.4% in August, matching market expectations after a revised 0.1% increase in July, according to the US Labor Department.

Dollar comeback case 'a decent one' – September Fed hike 'back in play'

The dollar was left nursing heavy losses against most of its major peers after last month’s Treasury buyback wobble. Notwithstanding this, we think that the case for a near-term bounce in the greenback is a decent one. Warsh's hawkish pivot at Jackson Hole, followed by what was a blowout US payrolls report for August, has put a September rate hike from the Fed back in play.

Venezuela’s 65-billion-barrel Oil deal could reshape America’s inflation fight

The United States (US) has secured unprecedented access to part of Venezuela’s vast Oil reserves. The timing is particularly significant as the war with Iran is disrupting Middle Eastern supplies, keeping energy prices elevated and reviving concerns about inflation.