Gold Price Forecast: XAU/USD fall as US yields tick higher after Powell’s words

Jerome Powell sounded cautious with a hawkish tilt, leaving the door open for another hike in 2023.
Markets are price back chances of a hike in November.
Higher US yields opened the downside to the yellow metal.

Patricio Martín FXStreet

On Friday, the Gold Spot price XAU/USD faced selling pressure after Fed Jerome Powell’s words at the Jackson Hole Symposium. The spot trades near the $1,910 area, where the 20 and 200-day Simple Moving Average (SMA) are about to perform a bearish cross.

Chair Powell stated that the Federal Reserve (Fed) needs to be cautious regarding the next meetings. He commented that the economy hasn’t cooled down as expected and that the bank will maintain its restrictive policy until it shows signs of cooling down. As he pointed out in July, it will all come down to the incoming data. The Fed will get an additional Nonfarm Payrolls and inflation report from August, and those data points will help investors model their expectations.

Reacting to the speech, US yields, which tend to be negatively correlated with non-yielding metal prices, rose with the 2-year rate leading towards 5.06%, seeing more than 0.80% gains. In line with that, the odds of a 25 basis point (bps) hike in November, according to the CME FedWatch tool, rose to 44%.

XAU/USD Levels to watch

The technical analysis of the daily chart points to a neutral to a bearish outlook for XAU/USD, indicating a decline in the recent bullish strength. The Relative Strength Index (RSI) exhibits a negative slope below its midline, while the Moving Average Convergence (MACD) prints flat green bars.

Support levels: $1,900, $1,880, $1,850

Resistance levels: $1,915 (bearish cross between the 20 and 200-day SMA), $1,930, $1,950

XAU/USD Daily chart

XAU/USD

Overview
Today last price	1914.37
Today Daily Change	-2.55
Today Daily Change %	-0.13
Today daily open	1916.92

Trends
Daily SMA20	1919.36
Daily SMA50	1931.59
Daily SMA100	1958.96
Daily SMA200	1909.38

Levels
Previous Daily High	1923.43
Previous Daily Low	1911.83
Previous Weekly High	1916.29
Previous Weekly Low	1885.13
Previous Monthly High	1987.54
Previous Monthly Low	1902.77
Daily Fibonacci 38.2%	1919
Daily Fibonacci 61.8%	1916.26
Daily Pivot Point S1	1911.36
Daily Pivot Point S2	1905.79
Daily Pivot Point S3	1899.76
Daily Pivot Point R1	1922.96
Daily Pivot Point R2	1928.99
Daily Pivot Point R3	1934.56

Author

Patricio Martín

FXStreet

Patricio is an economist from Argentina passionate about global finance and understanding the daily movements of the markets.

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