Gold Price Forecast: XAU/USD eases near $1,800 ahead of Powell speech

Update: Gold prices linger near $1,800 and record some mild gains following the previous session’s consolidative move. The prices seem to be stabilizing now to make a consolidative move in a trading band. The higher USD valuation, which makes the precious metal expansive for the other currencies holders continues to exert pressure on gold’s higher side. The softer US Initial Jobless Claims data relieve some pressure off the gold prices amid concerns that the Fed will start a reduction in its bond-purchasing program. The rebound in the US Treasury yields also weighed on the gold prices as it reduces the appeal of the non-yielding asset. A sell-off in equities helped prices to scale up. Concerns over the delta contagion crisis reduce investor confidence and risk appetite that eventually supported corrective pullback in gold prices.

Gold (XAU/USD) traders remain at the loggerheads around $1,793, following the first daily positive closing in three, during Friday’s Asian session. The yellow metal benefited from the market’s risk-off mood the previous day, ignoring the US dollar recovery. However, cautious sentiment ahead of Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium probes the gold prices of late.

The main contributors to the sour sentiment were the latest comments from the Fed officials who backed tapering concerns, as well as geopolitical challenges from the Middle East and China, not to forget covid woes.

Topping all is Dallas Fed President Robert Kaplan who said, “Fed's asset purchases had their purpose and their time but not longer well-suited to the situation.” James Bullard and Ester George were the rest of the non-voting Fed members who followed Kaplan and firmed up concerns over tapering.

Furthermore, Blast at Kabul airport and reports of two or three US officials being hurt raised worries of the US response to the Taliban. Elsewhere, the likely meet between the US and Chinese equity officials joins Beijing’s dislike for American pressure and meddling into the internal matters to highlight the geopolitical fears.

It’s worth mentioning that faster spread of the coronavirus and chatters over six-month immunity of vaccines, as well as the need for a third jab, also add to the risk-off mood.

Amid these plays, the US 10-year Treasury yields remained indecisive around 1.34% but Wall Street snapped a five-day uptrend. Further, the US Dollar Index (DXY) rose the most in a week after four days of a downside, exerting downside pressure on the commodities and Antipodeans.

Moving on, the US data, like the Core PCE Price Index for July, will join the risk catalysts to entertain gold traders. However, major attention will be on how Powell defends the Fed’s easy money policies.

Read: Fed Chair Powell’s Jackson Hole Speech: Caution will win out

Technical analysis

With its first positive daily closing in three days, gold portrayed a bullish crossover of the 100-DMA to the 200-DMA amid upbeat MACD signals. The same hints at the metal’s further upside.

However, a downward sloping trend line from June near the $1,800 threshold and a convergence of the stated key DMAs close to $1,810–11 will be tough immediate challenges for gold buyers.

Should the yellow metal crosses $1,811 on a daily closing basis, a clear run-up towards $1,835, surrounding multiple levels marked since mid-July, can’t be ruled out. Though, any further upside past $1,835 will be challenged by early June’s low near $1,855 before directing the bulls towards the June month’s top of $1,916.

On the flip side, $1,775 and June’s low around $1,750 can entertain short-term sellers ahead of the August 10 low near $1,717.

During the quote’s weakness below $1,717, the $1,700 round figure will be the key as a daily closing below the same may not hesitate to refresh the multi-day low, marked in August, surrounding $1,686.

Gold: Daily chart

Trend: Further recovery expected