The GOLD price (XAU/USD) is hovering around $1,865, having recovered from a one-month low, as bullion traders anticipate Federal Reserve (Fed) Chairman Jerome Powell’s speech amid hawkish expectations for the US central bank’s next move. It’s worth noting that policymakers’ optimism in the United States is also weighing on precious metal prices prior of the crucial event.

The United States’ recessionary difficulties are teasing GOLD sellers.

Following the release of excellent employment and activity numbers in the United States on Friday, policymakers in the United States appear to be hopeful about the economic shift. This is in addition to the recent hawkish leaning over the Federal Reserve’s (Fed) future move, as well as technical evidence, to keep GOLD sellers optimistic.

On Tuesday, US Treasury Secretary Janet Yellen and President Joe Biden praised the latest economic data, putting the brakes on the country’s recession. Remarks from Federal Reserve Bank of Atlanta President Raphel Bostic bolstered the Fed’s hawkish fears. “The strong labor market definitely means ‘we have to put in a little more work,'” the Fed’s Bostic told Bloomberg in an interview.

The XAU/USD price is being influenced by US-China tensions.

While hawkish Fed bets and prospects for US growth favour GOLD sellers, the easing of US-China tensions appears to put a floor under metal prices. A rush on the US diplomatic visit to Beijing, as well as China’s aggressive response to the US shooting down its balloon and labeling it a spying attempt, prompted the market’s risk-off mentality and challenged gold buyers the day before. However, US President Joe Biden’s newest remarks on the topic appear to be reassuring, as he stated, “The balloon episode does not harm US-China ties.”
US Treasury bond yields benefit US Dollar bulls, but GOLD bulls should be cautious.
Given the Fed’s hawkish bent and the United States’ receding recession difficulties, US Treasury bond yields continue Friday’s bounce from a multi-day low, which supports the US Dollar rally and impacts on the GOLD price. Nonetheless, the benchmark US 10-year Treasury bond yields are hovering around 3.63%, following a two-day bounce from the monthly low.

Jerome Powell, Chairman of the Federal Reserve, is interested in
Given the Federal Reserve (Fed) Chairman Jerome Powell’s scheduled address, the GOLD price is likely to stay sluggish ahead of the crucial event. However, Fed Chair Jerome Powell may opt to use the recent improvement in US statistics and hawkish Fed bets to put downward pressure on the XAU/USD. It should be mentioned that US President Joe Biden’s State of the Union (SOTU) remarks will also be scrutinized for short-term trends.

Gold Technical Outlook

Gold’s week-start corrective bounce from the one-month low failed to breach the prior support level, which is now resistance around $1,885. Though this is still positive for XAU/USD bears at this point, they may want to keep their optimism cool for now.

It is worth noting that the bias signals from the Moving Average Convergence and Divergence (MACD) indicator, as well as the stable Relative Strength Index (RSI) line at 14, could add strength to an overall negative outlook.
With this, the GOLD price is still on its approach to the 50-day moving average support of $1,851. However, a horizontal area comprised of various levels indicated since early August 2022 will precede $1,800 by a day or two and could put the potential for further downside under scrutiny.

Increased attention to $1,885 will imply that the price is worth buying at this point, with a low risk/high reward scenario and a high probability of success. Based on the most recent data, XAU/USD bulls should be interested in buying these new highs.