Gold prices are undergoing a period of consolidation on Wednesday as market participants eagerly await Federal Reserve Chair Jerome Powell’s upcoming speech for a potential shift in the metal’s trajectory. The uncertainty surrounding the US Dollar’s direction, combined with mixed messages from various Fed policymakers, has left investors on edge.
Asian traders have adopted a cautious stance, overlooking Wall Street’s positive close, as concerns over China’s economic slowdown and the persistent decline in US Treasury bond yields loom large. The Federal Reserve’s interest rate outlook has become a focal point of apprehension, especially following conflicting statements from key Fed officials.
While some policymakers, like Chicago Fed President Austan Goolsbee, emphasize maintaining current rates, others, including Minneapolis Fed Bank President Neel Kashkari and Fed Governor Michelle Bowman, hint at the possibility of rate hikes. Fed Governor Christopher Waller highlighted the need to closely monitor the robust third-quarter US economic growth data before making any policy decisions.
Market attention is now fixated on Powell’s scheduled speeches on November 8 and 9, where he is expected to address crucial monetary policy challenges in the global economy. The looming uncertainty has caused anxiety within the market, likely bolstering the US Dollar’s position, which could potentially keep Gold buyers at bay. However, a potential resurgence in US Treasury bond yields might offer temporary relief to the recent downtrend in Gold prices.
Technical analysis indicates that Gold’s recent breakdown below the rising trendline support at $1,978 has set the stage for a potential downtrend. The bullish 21-day Simple Moving Average (SMA) at $1,961 might provide some immediate support, with the $1,950 psychological level looming as the next significant target. Despite this, the 14-day Relative Strength Index (RSI) indicator suggests the possibility of a rebound at lower levels, indicated by its position above the 50 level.
For a substantial recovery, Gold buyers would require a sustained breach of the triangle support-turned-resistance line at $1,984. If achieved, the $1,993 and $2,000 thresholds would likely pose as subsequent hurdles for the precious metal. With the Federal Reserve’s policy stance and the US bond market’s performance dictating Gold’s future, market participants remain vigilant for any potential shifts in direction.