Gold price forecast are in a phase of consolidation just below the record high of $2670, reached earlier this week. The market is turning cautious ahead of upcoming speeches from Federal Reserve (Fed) officials, especially Chairman Jerome Powell, which could provide new direction for gold’s next move.
Will Powell’s Speech Influence a Gold Price Correction?
Several speeches from Fed officials are scheduled, but the most critical will be Fed Chairman Jerome Powell’s opening remarks. Powell’s comments are expected to offer clues on the size of the next interest rate cut, with a 62% chance that the Fed may reduce rates by another 50 basis points in November.
Fed Governor Adriana Kugler recently reinforced this dovish outlook, stating her strong support for last week’s rate cut and signaling further rate cuts could be on the horizon. This has led to growing expectations of additional rate cuts, driven by weak U.S. economic data, including the Consumer Confidence index and regional activity reports.
Dovish Fed and Market Optimism Fuel Gold Prices
The market’s optimism about stimulus measures from China and a dovish Fed stance helped boost gold prices slightly on Thursday. The recent recovery in the U.S. Dollar (USD) and Treasury bond yields was put on pause, allowing gold prices to edge higher. However, traders are holding back on big bets due to the current overbought technical conditions, awaiting more concrete signals from Fed officials.
Economic reports such as the U.S. Durable Goods Orders, the final Q2 GDP data, and weekly jobless claims could provide trading opportunities for gold. Meanwhile, traders are also focusing on Friday’s U.S. Personal Consumption Expenditures (PCE) Price Index, a key inflation indicator, which will follow Powell’s speech.
Gold Price Takes a Pause Before Fed Chair’s Key Speech
Gold price forecast experienced a slight dip from their all-time highs as the U.S. Dollar rebounded after reaching a 14-month low. Market participants are also taking profits from short USD positions in anticipation of Powell’s speech. The outlook for gold in the short term hinges on whether Powell’s speech will reignite momentum or trigger a correction.
Gold Price Technical Analysis: Daily Chart Insights
Technically, gold remains in an overbought zone on the daily chart, suggesting that a pullback is possible in the near term. The 14-day Relative Strength Index (RSI) currently stands at 76, indicating limited immediate upside potential.
If the bulls regain momentum, a break above the $2670 level would be crucial for pushing prices toward $2700. On the other hand, a pullback could see prices testing the September 24 low of $2623, with the $2600 mark being the next major support level.
In case of further declines, sellers might target the September 20 low at $2585.
Conclusion
In conclusion, the gold market is at a pivotal moment, waiting for guidance from upcoming Fed speeches, particularly Powell’s. Traders should keep a close eye on U.S. economic data and the Fed’s commentary, as these will likely dictate the future direction of gold prices. Gold’s short-term trend remains uncertain, with a potential correction on the horizon. However, the long-term outlook remains bullish if the Fed continues its dovish monetary policy.
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