Gold Price Forecast: XAU/USD Dips to $2126 Ahead of Powell’s Testimony; Sell Now?

As the European trading session unfolds on Wednesday, the gold price (XAU/USD) demonstrates a slight downtrend to trade at $2126.29,

Arslan Butt•Wednesday, March 6, 2024•2 min read

As the European trading session unfolds on Wednesday, the gold price (XAU/USD) demonstrates a slight downtrend to trade at $2126.29, slightly down by 0.05%, moving away from its recent approach towards an all-time high.

Investors are reevaluating their positions following a robust rally in the preceding week and in anticipation of Federal Reserve Chair Jerome Powell’s forthcoming congressional testimony.

Powell’s statements are highly anticipated for insights into the Fed’s interest rate trajectory, which is expected to significantly influence the dynamics of the US Dollar (USD) and set the direction for the non-yielding yellow metal.

Powell’s Testimony and Economic Indicators to Drive Gold Price

This Wednesday’s economic calendar is packed with key releases, including the US ADP report on private-sector employment and JOLTS Job Openings data, providing traders with potential short-term trading strategies for gold ahead of Friday’s Nonfarm Payrolls (NFP) report.

Amid geopolitical tensions in the Middle East, slowdown concerns in China, and speculation of a Fed rate cut in June, the backdrop appears supportive for gold, potentially offsetting pressures on the USD.

Gold Price Forecast: Key Economic Data and Fed Rate Speculation in Focus

Recent weaker US economic indicators have bolstered the expectation of an imminent Fed rate cut, propelling gold prices towards their peak.

The ISM’s report highlighted a slowdown in service sector growth, while the Census Bureau noted a significant drop in factory orders, suggesting a cautious outlook among investors. These developments, combined with ongoing geopolitical risks and China’s economic challenges, have heightened the appeal of gold as a haven.

Investor Sentiment and Upcoming Economic Events

Investor caution prevails as attention turns to Jerome Powell’s testimony, which is poised to clarify the Fed’s rate adjustment plans and stimulate market movement for XAU/USD.

With a 70% market expectation of a rate cut by June, according to the CME Group’s FedWatch tool, the downside for gold remains limited.

The upcoming US ADP employment report and JOLTS Job Openings figures will further influence trading strategies as the market gears up for the NFP report, underscoring a pivotal week for gold price forecasts.

Gold (XAU/USD) Price Forecast: Technical Outlook

GOLD (XAU/USD) hovers around a pivot point of $2131.09 in the 4-hour chart timeframe. Facing immediate resistance at $2139.17, $2149.06, and $2158.42, Gold’s upward trajectory appears capped.

Support levels are established at $2111.30, $2101.36, and $2090.48, potentially halting further declines. The Relative Strength Index (RSI) at 79 indicates the asset is in overbought territory, with a Doji candle formation below the $2132 level, suggesting a selling trend.

The 50-day Exponential Moving Average (EMA) stands at $2069.98, reinforcing a bearish outlook below $2132, though a breakthrough above this threshold could tilt sentiment to bullish.

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ABOUT THE AUTHOR See More

Arslan Butt

Index & Commodity Analyst

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.