Gold Price Forecast: XAU/USD soars as Fed Powell puts the breaks on 75bps hike sentiment

• Gold is benefiting from safe-haven flows and a dialling back of an uber hawkish Fed. 
• Fed's chairman, Powell, has taken out 75bps rate hike speculation in markets.  

At $1,885, the gold price is rallying some 0.87% on the day, breaking out of sideways consolidation and taking on a critical daily resistance area after Federal Reserve chairman, Jerome Powell disappointed the more hawkish of the financial market's participants. 

Fed futures were initially pricing in a higher chance of a 50 basis point hike at the June meeting before Powell spoke, but the US dollar has come under strong selling pressure during the press conference. Powell stated that 75bps hikes were not on the table and that it will be 50bps at the next two meetings if the members of the board see what they expect to see.

The comments have stripped the 2-year Treasury yield down to a low of 2.614% so far, sinking the US dollar index to 102.50 from the post-Fed interest rate decision highs of 103.61. The gold price has benefitted from a combination of the dialling down of 75bp hikes and safe-haven flows given the uncertainty expressed by the Fed over the Ukraine crisis.  

Meanwhile, a press release has also been published with the plans for reducing the size of the balance sheet. 

Gold technical analysis

Gold has rallied into the daily resistance from an area of demand from where the price last reacted in a significant fashion leading to what would be fresh cycle highs. However, the bulls need to get above $1,900 to mark a more convincing bullish case for higher on the charts. Failure to do so could otherwise lead to a downside extension towards $1,820 in due course.