Gold Price Forecast: XAU/USD recovers above $1,900, Fed Chair Powell, central bankers’ speeches eyed

Gold Price (XAU/USD) regains upside momentum, after snapping a two-day winning streak the previous day, as markets prepare for the key central bankers’ speeches at the European Central Bank (ECB) Forum in Sintra. Apart from that, the economic optimism backed by headlines from the US and China also underpins the XAU/USD rebound.

Gold Price recovers on economic optimism

Gold Price slips off the bear’s radar, after teasing them on Tuesday, as markets brace for top-tier central bankers' speeches amid the receding hopes of witnessing recession in the US and China, the world’s top-two economies.

On Tuesday, a slew of the US data allowed the US Dollar to pare intraday losses and bolstered economic optimism, which in turn allowed US President Joe Biden to rule out recession woes. The same recently underpinned the Gold Price rebound.

Notable among them were the Durable Goods Orders, Conference Board's (CB) Consumer Confidence Index and a few housing numbers. That said, US Durable Goods Orders marked a surprise growth of 1.7% for May versus -1.0% market forecasts and 1.2% prior (revised). Further, the US Conference Board's (CB) Consumer Confidence Index rose to 109.7 for June from 102.5 in May (revised from 102.3).

On the same line, US Housing Price Index rose to 0.7% in April from 0.5% previous readings (revised), versus 0.3% expected. Meanwhile, the S&P/Case-Shiller Home Price Index came in as -1.7% YoY for April, down from -1.1% prior but better than -2.6% market forecasts. Additionally, New Home Sales rose 12.2% MoM in May from 3.5% prior and 0.5% anticipated whereas the Richmond Fed Manufacturing Index improved to -7.0 in June compared to -15.0 prior and -10.0 expected.

Furthermore, China-linked optimism also underpins the Gold Price recovery due to the dragon nation’s status as one of the biggest XAU/USD customers.

Market sentiment improved the previous day on China news and favored the Gold buyers previously before the US data weighed on the XAU/USD. Notable among them were headlines suggesting that Asian lobbyists are advocating for easier rules for Chinese equities’ overseas listing and comments from Premier Li Qiang.

That said, Chinese Premier Li Qiang said on Tuesday, “China was still on track to reach its annual growth target of around 5.0% for the year.” The policymaker also added that China will introduce more pragmatic measures to expand domestic demand and stimulate market vitality.

Apart from that, the People’s Bank of China’s (PBoC) lower-than-expected fixing of the USD/CNY price, despite marking the fresh year-to-date top, also weighed on the US Dollar and favored the XAU/USD. On the same line was a Reuters piece that signaled that China's major state-owned banks reportedly sold US Dollars in the offshore spot foreign exchange market, as authorities sought to steam the recent slide in the Chinese Yuan.

China, Russia news join preparations for Fed Chair Powell’s speech to check XAU/USD bulls

While the aforementioned catalysts could be held responsible for the Gold Price recovery, the XAU/USD bulls are far from taking control amid the risk-negative headlines about China and Russia join the cautious mood ahead of Federal Reserve Chairman Jerome Powell’s speech.

US President Joe Biden said late Tuesday that China has enormous problems and raised fears about the world’s second-biggest economy, as well as triggered the fears of a US-China tussle, which in turn prod the Gold buyers. His comments were joined by the Wall Street Journal (WSJ) news saying, “The Biden administration is considering new restrictions on exports of artificial intelligence chips to China, as concerns rise over the power of the technology in the hands of US rivals, according to people familiar with the situation.”

Further, Moscow’s tactical flight exercises over the Baltic Sea join the concerns that Russian President Vladimir Putin will act to restore his military confidence after Wagner Group’s mutiny to weigh on the sentiment and the Gold Price.

Additionally, keeping the Gold Price in check is the market’s preparations for Fed Chair Powell’s speech at the European Central Bank (ECB) Forum in Sintra. “The FOMC is very clear that a period of sub-trend activity may be needed to bring inflation under control and so far, that doesn’t seem to be happening,” said Analysts at the ANZ. The same could join the latest upbeat US data to help Fed’s Powell remain hawkish and weigh on the XAU/USD price.

Gold Price Technical Analysis

Gold Price remains within a monthly bearish channel, recently bouncing off the support line surrounding $1,905.

It’s worth noting, however, that the XAU/USD’s sustained trading below the 200-Exponential Moving Average (EMA) and looming bear cross on the Moving Average Convergence and Divergence (MACD) indicator keeps the Gold sellers hopeful.

Even so, the below 50.0 conditions of the Relative Strength Index (RSI) line, placed at 14, suggests bottom-picking of the Gold Price near the $1,900 round figure, if at all the XAU/USD bears manage to defy the stated channel formation with a downside break of $1,905 support.

Hence, the Gold bears need validation from the $1,900 threshold to retake control.

On the contrary, a convergence of the aforementioned descending trend channel’s top line and the 200-EMA, close to $1,955 at the latest, appears a tough nut to crack for Gold buyers. That said, an eight-day-old descending resistance line, close to $1,930 at the latest, restricts the immediate upside of the Gold Price.

Gold Price: Four-hour chart

Trend: Further downside expected