Breaking: Gold rises to 3.5-month high above $1800 on soft US Dollar

• Gold price climbs above $1800 for the first time since August 2022.
• Dovish speech by the Federal Reserve Chair Jerome Powell weakened the US Dollar.
• The US Dollar Index tumbles below the 105.000 mark, while US T-bond yields plunge to 3.60%.

Gold price rallies and hits a fresh three-month high following a more “dovish” than expected message from US Federal Reserve (Fed) Chairman Jerome Powell. Another factor denting demand for the US Dollar (USD) is that the Federal Reserve preferred gauge for inflation was unchanged, while unemployment claims were lower than expected. At the time of writing, the XAU/USD is trading above the $1800 mark for the first time since August.

Gold soars on dovish remarks by Fed Chair Powell as US bond yields plummet

XAU/USD remains in the driver’s seat after hitting a daily low of $1767, Wednesday’s high, towards $1803.40,  following dovish remarks from Jerome Powell on Wednesday. Powell said that “moderating the pace of rate increases may come as soon as the December meeting,” cementing expectations that the Fed will move away from the 75 bps hikes they’ve pursued at the last four meetings in favor of a slower 50 bps pace. In the Q&A after the speech, he said that “my colleagues and I do not want to overtighten,” referring to monetary policy.

Data-wise, the economic docket for the United States (US) did not help the US Dollar, which remains on the back foot following Powell’s speech. The US Core Personal Consumption Expenditure (PCE), the Fed gauge for inflation, rose by 5% YoY, below the previous month’s 5.2% reading, and aligned with consensus, Commerce Department data revealed Thursday.

In the meantime, initial Jobless Claims for the week ending in the last week on November 26 rose by 225K, below the expected 235K by analysts and less than the previous week’s reading.

Elsewhere as the US Dollar Index (DXY) drops below the 105.000 mark, extending its daily losses to 1%, US Treasury bond yields are plunging, with the US 10-year Treasury bond yield reaching 3.600%, while Gold prices extended its gains.

Gold 1-hour Chart

Gold Key Technical Levels