XAU/USD: Will Powell Aid in Closing the Week Above $2,050?

XAU/USD has exhibited a resurgence in positive momentum early this Friday. Reversing a corrective downturn following its attainment of a six-month peak at $2,052 on Thursday. The prevailing weakness in the United States Dollar and US Treasury bond yields is proving advantageous for the XAU/USD price.

The gold price seems to have reinstated its upward trajectory. Evident in the 14-day Relative Strength Index (RSI) indicator. Which has retreated from the overbought territory and currently resides within the bullish zone. This suggests the potential for a renewed upward movement.

The 50-day Simple Moving Average (SMA) positioned to achieve a weekly closing above the 200-day SMA, and such an event would confirm a Golden Cross.

On the positive side, embracing levels beyond the multi-month high of $2,052 is anticipated to extend the upward trend towards the static resistance at $2,070. Subsequently, the all-time high of $2,079 will become the focal point for gold buyers.

Conversely, immediate support identified at the low of $2,035 observed on Thursday, beneath which a retest of the low recorded on Tuesday at $2,012 becomes a plausible scenario.

In the event of a further decline, the $2,000 threshold poised to act as a support level for gold buyers.

XAU/USD Rebounds on Weak USD and Bond Yields; Eyes Powell’s Guidance

The gold market experienced a return to positive territory early this Friday. Reversing a corrective decline observed after reaching a six-month peak of $2,052 on Thursday. The renewed weakness in the United States Dollar (USD) and US Treasury bond yields is proving advantageous for the gold price. Market attention is now turning towards the upcoming release of US ISM Manufacturing PMI data and the dual appearances by US Federal Reserve (Fed) Chair Jerome Powell later in the day.

Gold is awaiting further guidance from Fed Chair Jerome Powell.

XAU/USD: Soft US Inflation Data and Dovish Fed Signals Lift Wall Street Indices

Recent soft readings of the US Core Personal Consumption Expenditures (PCE) Price index data. Coupled with dovish commentary from Fed policymakers, have strengthened expectations of a dovish stance by the Fed. The Core PCE Price Index, a highly anticipated inflation metric, rose at an annual pace of 3.0% in October. Moderating from three consecutive months of 3.4% readings, although still above the Fed’s 2% target. On a monthly basis, the Core PCE inflation reported no growth in October. Missing the forecast of a 0.1% increase and down from the 0.4% registered in September.

Also Read: EUR/USD Declines Due Weaker EU Inflation, Focus on to US PCE

In remarks on Thursday, New York Fed Bank President John Williams stated, “In balancing the risks of too-high inflation and a weaker economy, and based on what I know now, my assessment is that we are at, or near, the peak level of the target range of the federal funds rate.” San Francisco Fed President Mary Daly mentioned that her “base case” does not anticipate further rate hikes, although it is “too early to know” if the Fed is finished with rate increases. These dovish signals propelled Wall Street indices higher.

Investor Caution Prevails as December Begins; Powell’s Speech Looms Before Fed Blackout

Despite challenges in Asian markets to capitalize on a positive Wall Street close. Investors are maintaining caution as December begins, particularly ahead of Fed Chair Powell’s speech. This appearance marks his last before the Fed’s ‘blackout period. Which starts on Saturday in anticipation of the December 12-13 policy meeting.

Gold traders will scrutinize Powell’s words closely to assess whether speculations regarding Fed rate cuts hold merit. Powell is expected to maintain his rhetoric stance that further tightening remains a possibility if progress on inflation stalls.

In the interim, the gold price will continue to find support from a surprising expansion in Chinese Caixin Manufacturing PMI data for November, as China remains the world’s leading gold consumer.

On Thursday, the gold price extended its corrective downside as markets engaged in profit-taking on long positions following the recent upsurge, amid the monthly closing. The end-of-the-month flows provided a temporary respite to the US Dollar.