Gold Price Forecast: XAU/USD Jumps To One-Month Tops On Powell’s Remarks

Gold caught some aggressive bids and shot to near one-month tops, around the $1,830 region during the early North American session. The latest leg of a sudden spike over the past hour or so was triggered by the Fed Chair Jerome Powell's dovish comments. In the prepared remarks for delivery to the House Financial Services panel, Powell said that inflation is likely to remain elevated in the coming months but will fade away. This, in turn, suggests that the Fed could wait for a longer period before tapering its asset purchases or raising interest rates.

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Investors now seemed to have scaled back their expectations for an earlier than anticipated policy tightening by the Fed. This was evident from a sharp fall in the US Treasury bond yields, which provided a strong lift to the non-yielding gold. The combination of factors prompted some aggressive selling around the US dollar and was seen as another factor that acted as a tailwind for dollar-denominated commodities, including gold.

With the latest leg up, the XAU/USD now seems to have confirmed a near-term bullish breakout through a one-week-old trading range. Some follow-through buying beyond the very important 200-day SMA will reaffirm the constructive outlook and set the stage for an extension of the recent strong recovery move from the $1,750 area, or two-and-half-month lows touched in June. The next relevant hurdle is pegged near the $1,868-70 region before gold eventually aims back to reclaim the $1,900 round-figure mark in the near future.

Previous update: Gold price is back is holding onto the recent upbeat momentum above $1800, having witnessed an up and down session a day before. The US inflation surged to the highest level in 13 years last month and reignited Fed’s hawkish expectations, boosting the US dollar across the board at gold’s expense. However, mounting Delta covid strain concerns and US stimulus optimism kept the gold bulls motivated. Heading into the Fed Chair Jerome Powell’s showdown, gold is heading back towards the previous week’s high, as the dollar bulls take a breather, awaiting fresh hints on the timing of a likely tapering.

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