Gold Price Forecast: XAU/USD jumps to one-month tops on Powell’s remarks

Update: Gold caught some aggressive bids and shot to near one-month tops, around the $1,830 region during the early North American session. The latest leg of a sudden spike over the past hour or so was triggered by the Fed Chair Jerome Powell's dovish comments. In the prepared remarks for delivery to the House Financial Services panel, Powell said that inflation is likely to remain elevated in the coming months but will fade away. This, in turn, suggests that the Fed could wait for a longer period before tapering its asset purchases or raising interest rates.

Investors now seemed to have scaled back their expectations for an earlier than anticipated policy tightening by the Fed. This was evident from a sharp fall in the US Treasury bond yields, which provided a strong lift to the non-yielding gold. The combination of factors prompted some aggressive selling around the US dollar and was seen as another factor that acted as a tailwind for dollar-denominated commodities, including gold.

With the latest leg up, the XAU/USD now seems to have confirmed a near-term bullish breakout through a one-week-old trading range. Some follow-through buying beyond the very important 200-day SMA will reaffirm the constructive outlook and set the stage for an extension of the recent strong recovery move from the $1,750 area, or two-and-half-month lows touched in June. The next relevant hurdle is pegged near the $1,868-70 region before gold eventually aims back to reclaim the $1,900 round-figure mark in the near future.

Previous update: Gold price is back is holding onto the recent upbeat momentum above $1800, having witnessed an up and down session a day before. The US inflation surged to the highest level in 13 years last month and reignited Fed’s hawkish expectations, boosting the US dollar across the board at gold’s expense. However, mounting Delta covid strain concerns and US stimulus optimism kept the gold bulls motivated. Heading into the Fed Chair Jerome Powell’s showdown, gold is heading back towards the previous week’s high, as the dollar bulls take a breather, awaiting fresh hints on the timing of a likely tapering.

Read: Powell Preview: Three reasons to expect the Fed Chair to down the dollar

Gold Price: Key levels to watch

The Technical Confluences Detector shows that gold price is likely to face stiff resistance around $1818 amid renewed buying interest.

At the level, the previous week’s high and Tuesday’s high collide.

The next relevant upside barrier is seen at the pivot point one-week R1 at $1823.

The bulls will then strive to take on the confluence of the SMA200 one-day and SMA200 four-hour at $1827.

On the downside, immediate support awaits at $1810, where the Fibonacci 23.6% one-week converges with the Fibonacci 38.2% one-day and SMA10 four-hour.

Further south, a dense cluster of support levels is stacked up around $1805, which will limit the downside attempts.

That zone is the intersection of the SMA5 one-day, Fibonacci 61.8% one-day and Fibonacci 38.2% one-week.

The line in the sand for gold bulls is seen at $1799, the convergence of the previous day low and the Fibonacci 61.8% one-week.

Here is how it looks on the tool       


About Technical Confluences Detector

The TCD (Technical Confluences Detector) is a tool to locate and point out those price levels where there is a congestion of indicators, moving averages, Fibonacci levels, Pivot Points, etc.  If you are a short-term trader, you will find entry points for counter-trend strategies and hunt a few points at a time. If you are a medium-to-long-term trader, this tool will allow you to know in advance the price levels where a medium-to-long-term trend may stop and rest, where to unwind positions, or where to increase your position size.


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news

Latest Forex News

Latest Forex News

Editors’ Picks

EUR/USD retreats below 1.1300 area as NFP-inspired dollar weakness fades

EUR/USD jumped to a daily high of 1.1333 with the initial market reaction to the disappointing November Nonfarm Payrolls data but quickly returned below 1.1300. Rising US Treasury bond yields seem to be helping the dollar stay resilient against its major rivals. 


GBP/USDdrops to 1.3250 area as dollar regains strength

GBP/USD spiked above 1.3300 in the early American session with the initial market reaction to the gloomy US November jobs report. However, the greenback regathered strength on hawkish Fed commentary and forced the pair to turn south.


Gold struggles to capitalize on weak NFP data, holds near $1,770

Gold spiked to a daily high near $1,780 with the initial market reaction to the disappointing Nonfarm Payrolls data from the US but seems to be having a difficult time preserving its bullish momentum with the 10-year US T-bond yield staying resilient.

Gold News

The bull and the bear case for BTC

Bitcoin price saw a bullish impulse that faced massive headwinds before it tagged a crucial psychological barrier. Bitcoin is likely to experience massive volatility as the situation resolves over time. 

Read more

Cyber Monday 2021 Discounts!

Glued to your trading screen on Cyber Monday? Upgrade your skills by signing up for FXStreet’s Premium service, offered at a discount of up to 50%. Fellow traders have already taken advantage of Black Friday profits. What about you? 

Subscribe now!