Gold Price Forecast: XAU/USD climbs above $1750 as traders expect a hawkish Powell speech

• Gold price advances almost 0.30% on Thursday, courtesy of an upbeat sentiment and overall buck’s weakness.
• Investors mulled on mixed US economic data, released ahead of Powell’s speech.
• Fed officials expect a 50 or 75 bps rate hike at the next meeting; awaiting September’s data.
• Gold Price Forecast (XAU/USD): Neutral above $1800; otherwise, a re-test of the YTD lows below $1700 is on the cards.

Gold price trades in the green, spurred by overall US dollar weakness across the board, and falling US Treasury bond yields, amidst an upbeat trading session. XAU/USD opened near the day’s lows, around $1750, and rallied towards the high of the day at $1763.71 before retracing to current price levels. At the time of writing, XAU/USD is trading at $1755.93, above its opening price.

Global equities portray an upbeat sentiment. Incoming economic data from the US revealed that growth in the country improved but is stills in contractionary territory. The Gross Domestic Product (GDP) for the second quarter dropped 0.6%, less than estimates of minus 0.8%. That said, if the final reading comes negative, it would confirm that the US is in a technical recession, though today’s figures are still susceptible to revision.

In the meantime, the US Department of Labor revealed unemployment claims for the week ending on August 20. Initial Jobless Claims rose by 243K, less than the estimated 253K. This week’s report and the previous one further confirmed the robust labor market, as mentioned by some Fed officials, which had emphasized the need for further rate hikes amidst a high inflation environment.

The US Dollar Index, a gauge of the buck’s value vs. a six currencies basket, creeps lower by 0.12%, down at 108.476, undermined by the US 10-year Treasury bond yield dip to 3.028%, losing eight bps, ahead of Fed’s Chair Powell Jackson Hole speech.

Meanwhile, some Fed officials crossing wires have opened the door for additional rate hikes, led by Kansas City’s Fed Esther George, who said that she foresees rates above 4%.

Earlier, Atlanta’s Fed President Raphael Bostic commented that he’s undecided about going 50 or 75 but added that a Fed pivot is misguided. Contrary to Esther George’s opinion, Patrick Harker of the Philadelphia Fed noted that he expects to raise and hold rates at 3.4% while supporting a 50 bps increase for September.

Later, the St, Louis Fed President James Bullard reiterated that he expects the Federal funds rate (FFR) around 3.75% to 4% for 2022, adding that risks may have to be higher for longer.

What to watch

The US economic calendar will release the Fed’s favorite measure of inflation, July’s PCE, headline, and core figures before Wall Street opens. Later, the US Federal Reserve Chair Jerome Powell will hit the stand.

Gold Price Forecast (XAU/USD): Technical outlook

XAU/USD remains neutral-to-downward biased, confirmed by several factors. The daily moving averages (DMAs) above the spot price, and the Relative Strength Index (RSI) at 47.08, in the negative territory, are just two signs confirming the previously-mentioned. Also, gold buyers need to reclaim the $1800 figure to test the 100 and 200-day EMAs, around $1822-$1838. Failure to achieve the aforementioned will pave the way for further downside, opening the door for a fall to August’s 22 daily low at $1727.90, followed by $1700.