Gold Price Forecast: XAU/USD reaches a fresh-weekly high near $1817

Update:
Gold advances sharply, above $1800 as Federal Reserve Chairman Jerome Powell crossed the wires. At the time of writing, XAU/USD is trading at $1,814.50 during the North American session.

The US 10-year benchmark note drops one and a half basis points, from 1.78% to 1.764%, a headwind for the greenback. The US Dollar Index falls some 0.34%, currently at 95.67, after Fed’s Chair Powell remarks.

Summary of Fed’s Jerome Powell remarks

Jerome Powell, Federal Reserve president, crossed the wires at press time. So far, he said that the Fed would use their tools to get inflation towards the central bank target and emphasize that the US economy no longer needs accommodation. Powell further noted that the US central bank needs to focus more on inflation than the maximum employment goal

XAU/USD Price Forecast: Technical outlook

On its initial reaction to Fed’s head Powell remarks, XAU/USD left ALL the daily moving averages (DMAs) below the spot price. The first ceiling level for gold would be the January 3 daily high at $1,832, followed by November 16, 2021, pivot high at $1,877.

On the flip side, gold’s first support would be the January 6 daily high, previous resistance-turned-support at $1,811.54, followed by the psychological $1,800. A decisive break of that level would expose the 100-DMA at $1,793, followed by the January 7 daily low at $1,783.

End Update

The yellow metal extends its rally, edges higher for the third consecutive day, while US Treasury yields, particularly the 10-year benchmark note rate, fall for the first day in three, sitting at 1.778%. At the time of writing, the gold spot (XAU/USD) advances 0.04%, is trading at $1,808 during the North American session.

The market sentiment is upbeat, as portrayed by US equity futures pointing towards a higher open. Despite the previous-mentioned, investors’ eyes would turn to Fed’s Chief Jerome Powell testify against the Senate Banking Committee to speak about its nomination. However, he would sustain a Q&A session with the US Senators, so beware of the speed of the lifting and balance sheet chatters.

Some of Powell’s remarks prepared for his appearance, he pledged to “prevent higher inflation from becoming entrenched.”

In the meantime, the US Dollar Index, which measures the greenback’s performance against a basket of six peers, slides some 0.03%, sits at 95.96, a tailwind for the non-yielding metal, which usually appreciates when the US Dollar weakens.

Meanwhile, on Monday, some US commercial banks led by Goldman Sachs noted that the Federal Reserve would hike four times in the year, beginning with the March 2022 monetary policy meeting.

Fed speakers parade begins

Earlier in the day, Atlanta’s Fed President Raphael Bostic said that he expects three rate hikes in 2022, with risks of an additional hike. He also noted that “the balance sheet should decline faster than in the last tightening cycle, perhaps by $100 billion.“

In the same tone of rate hikes, Cleveland’s Fed President Loretta Mester said that if the economy performs the same as today in March, she will support a rate hike in that meeting. Further noted that she “penciled in three rate hikes for 2022 at the December meeting” and would like a faster reduction of the balance sheet than in the previous cycle.

Following Mester, Kansas City Fed President Esther George said that it would be appropriate for the Fed to move earlier on running down its balance sheet compared to its last tightening cycle.

XAU/USD Price Forecast: Technical outlook

Gold has a neutral bias, as shown by the daily moving averages (DMAs) residing in the $1,792-$1,805 range, trendless and has been like that in the last three trading days.

To the upside, gold’s first resistance would be the January 6 daily high at $1,811.54. A breach of the latter would expose the January 3 daily high at 1832, followed by November 16, 2021, pivot high at $1,877.

On the flip side, the first line of defense for XAU bulls will be the psychological $1800. A decisive break of that level would expose the 100-DMA at $1,793, followed by the January 7 daily low at $1,783, and then December 15, 2021, cycle low at $1,753.