Gold Price Forecast: XAU/USD Eyes $1,880 as Jerome Powell Gives Market Insight

Posted Wednesday, February 8, 2023 by
Arslan Butt • 1 min read

GOLD targets $1,880.00 resistance in the Asian market. The metal rebounded from a drop to $1870.00 and is likely to increase as market participant risk appetite improves. Investors have processed the hawkish interest rate guidance from Federal Reserve Chair Jerome Powell and President Biden’s comments at the State of the Union.

Powell emphasized that the Fed will raise rates further if the labor market exceeds expectations. Biden stated that the US is in a strong position to compete with China.

Risky assets such as S&P500 futures have recovered losses, indicating a risk-on mood, despite Powell’s hawkish comments and Biden’s tough stance on China. The US Dollar Index (DXY) is struggling to hold its ground and is expected to resume a downward trend. Additionally, 10-year US Treasury yields have fallen to nearly 3.65%.

Gold Technical Outlook

GOLD forms an inverted flag pattern on a 4-hour chart, indicating a period of consolidation followed by a potential breakdown. During the consolidation phase, some traders may start taking short positions while waiting for a bearish bias to develop.

GOLD is also facing difficulty staying above the 23.6% Fibonacci retracement level of $1,878.00 (calculated from the November 11 low of $1,617.32 to the February 2 high of $1,959.20). The 20-period Exponential Moving Average at $1,882.20 is a barrier to gold’s price.

Today, GOLD is likely to exhibit a pullback; therefore, a bullish breakout above the $1,883 level can expose GOLD price towards $1,895 or $1,910.

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