Gold Price Forecast: XAU/USD Bears Eye Fed’s Powell and NFP
Arslan Butt • 2 min read
At the start of the week, the price of GOLD has decreased as investors await the rate forecast from Federal Reserve Chairman Jerome Powell. The upcoming data from the US labor market by the end of the week is also expected to be crucial. As of now, GOLD has lost 0.15% with a drop from a high of $1,855.43 to a low of $1,851.47.
On Friday, the DXY index measuring the US dollar’s value against six major currencies dropped by 0.4% from its previous value to 104.527. However, the index had started the week strong at 105.36, its highest level since January 6th, before falling to 104.485 by the end of the week. The recent announcement of China’s lower-than-expected growth target of 5% may have caused some investors to seek refuge in the US dollar.
China’s goal for economic expansion has been set at 5% yearly growth rate. The ten-year US Treasury rates dropped to 3.970%, after last week’s high of 4.09%. Investors are now closely watching for Federal Reserve Chairman Jerome Powell’s testimony on monetary policy before the House Financial Services Committee on Wednesday.
Mary Daly, the President of the San Francisco Federal Reserve, stated that rates needed to rise, but it would be challenging to transition to half-point hikes. Powell’s perspective on the necessity of larger raises will be critical, with futures indicating a 72% likelihood that the Fed will increase rates by 25 basis points at its meeting on March 22.
On March 14, the February CPI data will be released, followed by the February Nonfarm Payrolls report on March 15, which is expected to show a more moderate gain of 200,000 compared to January’s significant increase of 517,000. ANZ Bank analysts believe that the next wave of hard data, beginning with non-farm payrolls this Friday, will be crucial to study, as they disagree with the assertion that current interest rates are too high.
According to early estimates, the nonfarm payroll is expected to have increased by around 200k, which is slower than the 517k increase in January. If this is true, it would be the slowest monthly gain since the start of the pandemic, suggesting that January was an outlier, and that payrolls are returning to the downward trend seen since August 2021, according to analysts. However, initial claims, the employment component of the ISM Services subindex, and seasonal considerations all indicate a better-than-expected outcome, in their opinion. Economists have provided a wide range of estimates, ranging from 100,000 to 325,000.
Gold Technical Outlook
GOLD prices have confirmed the inverted head and shoulders pattern by surpassing the neckline, indicating a positive momentum that supports the continuation of the bullish bias on an intraday basis. The target is to test 1878.80. The EMA50 is supporting the expected rise, but the stochastic might create temporary sideways bias until it gains positive momentum to push the price further up. However, breaking 1843.70, followed by 1828.70 levels, will stop the bullish trend and resume the correctional bearish track. Today’s expected trading range is between 1840.00 support and 1870.00 resistance.