Gold Price Forecast: XAU/USD perks up on Fed Powell dovish speech

Gold price is rising because of a dovish speech by Federal Reserve's Jerome Powell on Wednesday that sunk the US Dollar. At the time of writing, Gold price is up around 0.6% and has climbed from a low of $1,744.95 to score a high of the day at $1,764.85.  

Earlier in the day, Gold price pared gains as US bond yields climbed ahead a much-awaited speech from Federal Reserve Chair Jerome Powell. However, Powell said that policy will most likely need to remain restrictive for some time and that it makes sense to moderate the pace of interest rate increases. He said that the time to slow the pace of rate hikes could come as soon as the December meeting.

Consequently, a weaker dollar has kept Gold price on track for its best month since May 2021. The US dollar index, DXY, was last seen down 0.5% to 106.29, while the yield on the US 10-year note was down to 3.694%, not far from an over 7-week low of 3.62% on November 28th. The greenback is on track for its biggest monthly loss since September 2010 as investors look toward the Fed reaching a peak rate early next year. Markets now see a 75% chance for a smaller 50 bps interest rate hike in December, after four consecutive 75 bps increases.

US labour data cooling

Also, data suggested the labour market started to cool. ''The number of job openings in the US edged down to 10.3 million in October (10.7 million previously). The number of hires and total separations was little changed at 6.0 million and 5.7 million respectively. Job openings have eased from their peak of just under 12 million in March, but with 1.7 job openings per unemployed person in the US, the mismatch between labour demand and supply remains large,'' analysts at ANZ Bank explained. 

Meanwhile, analysts at TD Securities argue that a bull trap is being set-up in precious metals markets. ''Systematic trend followers have significantly covered their gold shorts over the past few days, while the resilient price action has likely continued to attract new long interest from discretionary money managers looking for a recession hedge amid peak central bank hawkishness.''

''However,'' the analysts said, ''narrative is chasing prices, and we see several catalysts on the docket that could spark a renewed leg lower as CTAs run out of dry-powder on the bid. Chair Powell's speech is an obvious candidate for a catalyst, alongside inflation and jobs data.''

Gold technical analysis

The daily chart's harmonic pattern is bullish but there is a lot of resistance for the bulls to get through. The price could be destined for a further consolidation if the bulls can not get above $1,770 as per the 4-hour chart: