Gold Price Forecast: XAU/USD Fell As US Yields Ticked Higher After Powell's Words
Photo by Dmitry Demidko on Unsplash
- Jerome Powell sounded cautious with a hawkish tilt, leaving the door open for another hike in 2023.
- Markets priced back chances of a hike in November.
- Higher US yields opened the downside to the yellow metal.
On Friday, the gold price faced selling pressure after Fed Jerome Powell’s words at the Jackson Hole Symposium. The yellow metal traded near the $1,910 area, where the 20-day and 200-day Simple Moving Averages (SMA) appeared set to perform a bearish cross.
Chair Powell stated that the Federal Reserve needs to be cautious in regards to 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% and 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 pointed to a neutral-to-bearish outlook for XAU/USD, indicating a decline in the recent bullish strength. The Relative Strength Index (RSI) exhibited a negative slope below its midline, while the Moving Average Convergence (MACD) printed flat green bars.
- Support levels were seen at $1,900, $1,880, and $1,850
- Resistance levels were seen at $1,915 (the bearish cross between the 20-day and 200-day SMA), $1,930, and $1,950
XAU/USD Daily Chart
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XAU/USD Technical Levels
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