Gold Price Forecast: XAU/USD retreats ahead of Federal Reserve Chairman Powell’s Testimony

Gold price (XAU/USD) holds lower ground near $1,847 after reversing from the highest levels in three weeks. The yellow metal’s latest pullback could be linked to the market’s cautious mood ahead of the key data/events, as well as a rebound in the United States Treasury bond yields. It’s worth noting, however, that the US Dollar’s failure to regain upside momentum ahead of the Federal Reserve (Fed) Chairman Jerome Powell’s Testimony, as well as the recent weakness in the US data and mixed Fed talks, keeps the XAU/USD buyers hopeful.

Gold bears sneak in as United States Treasury bond yields rebound

Although the Gold price began the week on a firmer footing, mainly due to the US Dollar weakness and risk-on mood, the recovery in the United States Treasury bond yields seems to have exerted downside pressure on the metal afterward. That said, the benchmark 10-year Treasury bond yields initially dropped to a one-week low of 3.897% before ending the day with mild gains near 3.96%. On the same line, the two-year counterpart ended Monday’s North American trading session with 0.60% intraday gains at 4.88%.

Mixed headlines from China, Fed talks weigh on XAU/USD price

While tracing Monday’s mostly quiet market moves, even if the traders reversed directions later in the day, headlines from China and surrounding the Federal Reserve (Fed) could be termed as the key catalysts.

That said, China eyed the modest 5.0% economic growth in its annual session of the National People's Congress (NPC), versus 6.0% market forecasts, which in turn raised doubts on the health of the world’s biggest commodity user and weighed on Gold price. On the same line, were comments from outgoing China Premier Li Keqiang as he said, “China should promote the peaceful development of cross-Strait relations and advance the process of China's ‘peaceful reunification’, but also take resolute steps to oppose Taiwan independence.”

Elsewhere, San Francisco Federal Reserve Bank President Mary Daly highlighted the importance of incoming data to determine how high the rates can go. Previously, Atlanta Fed President Raphael Bostic renewed concerns about the policy pivot and renewed the Gold price buying. However, the US Federal Reserve published a semi-annual Monetary Policy Report on Friday wherein it clearly said, “Ongoing increases in the Fed funds rate target are necessary.” The report also stated that the Fed is strongly committed to getting inflation back to 2%.

Mixed United States data keeps Gold buyers hopeful

Given the recently softer prints of the United States ISM Services PMI for February, as well as the Durable Goods Orders for January and the Conference Board’s (CB) Consumer Confidence for February, the Federal Reserve’s (Fed) ‘higher for longer’ plan appears in question. The same helped the Gold price in the last week, as well as during early Monday. However, Monday’s US Factory Orders for January improved to -1.6% MoM versus -1.8% expected and -1.7% prior and hence questioned the XAU/USD bulls afterward.

Federal Reserve Chairman Powell eyed

Although China’s monthly trade numbers and headlines from the NPC can entertain Gold traders, the semi-annual Testimony of Federal Reserve (Fed) Chairman Jerome Powell will be the key for XAU/USD traders, especially after recently mixed data and policy pivot talks. Fed’s Powell appears before the Senate Banking Committee on Tuesday and should defend his hawkish bias to keep the Gold bears on the table.

Also read: Gold Price Forecast: Bulls hold the grip, but for now, stay in the side-lines

Gold price technical analysis

Gold price confirmed a one-week-old rising wedge bearish chart formation on early Monday and has been depressed afterward.

In addition to the bearish chart pattern’s confirmation, bearish signals from the Moving Average Convergence and Divergence (MACD) indicator join the absence of the extreme Relative Strength Index (RSI) line, placed at 14, to also favor downside bias.

With this, the XAU/USD bears appear well-set to test the 200-Hour Moving Average (HMA) support of around $1,830 before dropping toward the theoretical target of the rising wedge confirmation, near the $1,800 threshold.

Meanwhile, the Gold price recovery remains elusive unless crossing the stated wedge’s top line, close to $1,860 at the latest.

Following that, tops marked during February 14 and 09, respectively near $1,870 and $1,890 in that order, could lure the XAU/USD bulls.

Overall, Gold lures bear as one of this week’s key events looms.

Gold price: Hourly chart

Trend: Limited downside expected