Gold recovers toward $1315 as Fed’s Powell speaks

Gold trades near $1314.50 during early Friday. The precious metal recovered nearly $1.5 as Fed’s Powell repeated latest remarks favoring monetary policy patience. The yellow metal has been pleasing sellers since last two-days due to rising US Dollar (USD) and challenges for the largest bullion buyers. Investors may now look for possible resolution on the US-China trade deal and developments of the India-Pakistan tensions in order to get the fresh impulse.

The Federal Reserve Jerome Powell is speaking at the Citizens Budget Commission Awards Dinner on Friday. The title for the speech is “Recent Economic Developments and Longer-Term Challenges". Initial comments from his speech kept repeating the recent statements like the Fed remains patient, watches risks and signs of upward pressure on inflation 'muted'.

Recent fundamentals have been supportive of the USD upside. Notable among them was Thursday’s advance release of the fourth quarter (Q4) gross domestic product (GDP) for the US. The Q4 2018 US GDP surpassed 2.3% market forecast by being at 2.6%. It should be noted that the US Dollar strength is adversely related to the commodity prices as they are mostly priced in the US currency.

In addition to the USD advances, challenges for the Gold’s largest buyers, namely India and China also weakens the precious metal. China has been witnessing sluggish data and its trade deal with the US is still looming whereas India is on a spat with its neighbor Pakistan when the domestic data aren’t so well.

As per the recent reports from Bloomberg, the US is in the process of finalizing the trade deal for discussion with the Chinese President. Though, nothing can be sure of the outcome unless formally announced as Trump administration has high demands like structural changes and strict IPR protection which China might not respect.

Other than Sino-US trade deal, developments surrounding the Indo-Pak situation and the US data might also direct near-term gold moves.

Gold Technical Analysis

50-day simple moving average (SMA) at $1300 can offer immediate support to the yellow metal ahead of fetching it to 38.2% Fibonacci retracement of its August 2018 to February 2019 upside, near $1275.

Alternatively, an upside clearance of $1320 might trigger the safe-haven’s rise to $1330 and $1336 prior to looking for a recent high of around $1347.