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Gold price flat-lines as traders keenly await Fed Chair Jerome Powell’s speech

November 8, 2023| Forex Market

  • Gold price oscillates in a narrow range amid the uncertainty over the Fed’s rate-hike path.
  • Declining US bond yields caps the recent USD recovery and lends support to the XAU/USD.
  • Traders now await Fed Chair Jerome Powell’s speech before placing fresh directional bets.

Gold price (XAU/USD) struggles to capitalize on the overnight bounce from the $1,957-1,956 region or a two-week low, and oscillates in a narrow trading band during the Asian session on Wednesday. Traders now seem reluctant and are seeking  clarity on the Federal Reserve’s (Fed) rate-hike path before placing fresh directional bets.

A slew of Fed officials acknowledged the US economic resilience and suggested that the central bank may not be done raising interest rates. Hence, the focus will remain glued to Fed Chair Jerome Powell’s speech due later during the North American session. The speech will play a key role in influencing the non-yielding Gold price.

In the meantime, a further decline in the US Treasury bond yields keeps a lid on the recent US Dollar (USD) recovery from its lowest level since September 20 touched on Monday. This, along with the prevalent cautious market mood and the uncertainty over China, continues to act as a tailwind for the Gold price and helps limit the downside.

Daily Digest Market Movers: Gold price struggles to gain traction as traders await Fed Chair Powell’s speech

  • The uncertainty over the Federal Reserve’s next policy move holds back traders from placing directional bets around the Gold price and leads to subdued price action on Wednesday.
  • The US central bank last week noted that financial conditions may be tight enough already to control inflation. Investors took this as a sign that the Fed was done with its policy-tightening campaign.
  • Furthermore, the softer US employment details released on Friday pointed to easing labour market conditions and reaffirmed expectations that the Fed will not hike interest rates any further.
  • Comments by several Fed officials this week, however, fuelled uncertainty on whether rates had reached their peak or there is a need to hike interest further to bring inflation back to the 2% target.
  • Minneapolis Fed President Neel Kashkari said on Tuesday that the labor market continues to be quite robust and with economic activity running this hot, the central bank’s job is not yet done.
  • Fed Governor Michelle Bowman repeated her view that the US central bank will likely need to raise short-term interest rates again to bring inflation down to the 2% target in a timely way.
  • Chicago Fed President Austan Goolsbee stressed that any change in the rate stance will primarily be influenced by progress on the inflation rate, though he refrained from speculating on future rates.
  • The market attention now shifts to Fed Chair Jerome Powell’s speech, which will be scrutinized for cues about the next policy move and provide a fresh directional impetus to the XAU/USD.
  • The US Treasury bond yields resume the recent downfall and hold back the US Dollar bulls from placing fresh bets, lending some support to the non-yielding yellow metal.

Technical Analysis: Gold price might now confront stiff resistance and remain capped near the key $1,980 resistance

From a technical perspective, the overnight swing low, around the $1,957-1,956 area, now seems to protect the immediate downside. A convincing break below the area might expose the 200-day Simple Moving Average (SMA) support, currently pegged near the $1,934 area, before the Gold price eventually drops to the $1,926-1,923 confluence, comprising the 100- and 50-day SMAs.

On the flip side, any meaningful recovery attempt now seems to confront stiff resistance near the $1,980 area. This is followed by the $1,992 hurdle ahead of the $2,000 psychological mark and the post-NFP swing high, around the $2,004 area. Bulls are likely to wait for some follow-through buying beyond the $2,009 region, or a multi-month high touched in October, before placing fresh bets.

US Dollar price this week

The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the weakest against the Swiss Franc.

USD   0.39% 0.76% 0.80% 1.21% 0.69% 0.99% 0.17%
EUR -0.40%   0.38% 0.41% 0.82% 0.29% 0.59% -0.23%
GBP -0.77% -0.38%   0.03% 0.43% -0.09% 0.21% -0.62%
CAD -0.80% -0.41% -0.03%   0.41% -0.12% 0.18% -0.64%
AUD -1.23% -0.83% -0.45% -0.42%   -0.53% -0.23% -1.06%
JPY -0.70% -0.31% -0.15% 0.14% 0.51%   0.29% -0.52%
NZD -1.00% -0.60% -0.22% -0.19% 0.23% -0.30%   -0.82%
CHF -0.17% 0.23% 0.60% 0.63% 1.04% 0.52% 0.82%  

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).

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