Gold Price Forecast: XAU/USD aims to regain $1,730 ahead of Fed Chair Powell’s speech

• Gold price pares intraday losses while bouncing off 200-HMA.
• Yields probe US dollar bulls ahead of ECB, Fed Chairman Jerome Powell’s speech.
• China-linked headlines flash mixed signals to challenge XAU/USD bears.

Gold price (XAU/USD) picks up bids to renew intraday high near $1,718 as the US dollar retreats ahead of the key events during early Thursday. In doing so, the yellow metal extends the previous day’s rebound from the one-week low amid softer yields and a mixed risk profile.

The US 10-year Treasury yields extend Wednesday’s pullback from the highest levels since mid-June to 3.23%, which in turn weighed on the US Dollar Index (DXY) which retreats to 109.50, stretching the previous day’s losses from the 20-year high.

The recent fall in yields could be linked to the market’s rush towards the bonds ahead of the all-important European Central Bank (ECB) Monetary Policy Meeting and Fed Chair Jerome Powell’s speech. That said, chatters surrounding Japan’s likely intervention to defend the domestic currency via the bond market seem to have weighed on the yields.

Elsewhere, mixed headlines from China also should have contributed to the XAU/USD rebound, due to Beijing’s status as one of the world’s biggest gold consumers.

Reuters mentioned three sources with knowledge of the matter while stating positive news for China’s housing market. “Zhengzhou vowed to start building all stalled housing projects within 30 days, by making good use of special loans, asking developers to return misappropriated funds, and encouraging some real estate firms to file for bankruptcy,” mentioned Reuters.

Even so, the risk-negative headlines concerning covid and Taiwan seemed to exert downside pressure on the metal prices. The South China Morning Post (SCMP) mentioned previously, “Shenzhen reduces entry quota for Hong Kong travelers.” Following that, Reuters’ news that Taiwan and the US are bracing for stronger ties also weighs on the sentiment.

While portraying the mood, the S&P 500 Futures print mild gains but the Asia-Pacific stocks trace mixed at the latest.

To sum up, the ECB’s 75 bps rate hike can restrict a short-term fall of the XAU/USD before the fresh downside, in a case where Fed’s Powell sounds hawkish. Overall, the gold price is likely to remain on the bear’s radar as ECB’s capacity to tighten monetary policy is limited compared to the Fed. Also, economic fears emanating from Europe aren’t off the table and keep gold bears hopeful.

Technical analysis

Gold price (XAU/USD) defends the latest bounce off the 200-HMA amid firmer RSI (14), which in turn directs the metal towards printing one more attempt to cross the downward sloping resistance line from August 29, at $1,718 by the press time.

Given the recent higher lows and a rebound from the 200-HMA, the XAU/USD is likely to cross the immediate hurdle to aim for the weekly top surrounding $1,727. Following that, the late August swing high near $1,745 appears the last defense of the gold sellers.

Alternatively, a downside break of the 200-HMA support near $1,714 becomes necessary for the gold bears to retake control. Even so, an upward sloping trend line from the previous day, around $1,708 at the latest, precedes the $1,700 threshold to challenge the downside.

Following that, the south-run towards the monthly low of $1,688 and the yearly bottom close to $1,680 can’t be ruled out.

Gold: Hourly chart

Trend: Further upside expected