Gold Price Forecast: XAU/USD Tries to Overcome $1,880 Hurdle as US Dollar Weakens Ahead of Fed Chairman Powell's Speech

Gold prices are showing mild gains, rebounding from a one-month low. The US dollar’s weakness and cautious optimism in the market are favoring the XAU/USD bulls. However, there is anxiety surrounding comments from Federal Reserve Chairman Jerome Powell and US President Joe Biden’s State of the Union address. The positive sentiment could be linked to comments from US Treasury Secretary Janet Yellen and President Biden, which have pushed back recession concerns and placated Sino-American fears. Meanwhile, hawkish Fed talks are putting a floor under the US Treasury bond yields and the US dollar. In terms of technical analysis, the gold price is rebounding from a horizontal support of $1,865 and is guarded by the 200-Simple Moving Average at $1,880. A clear break below $1,865 could challenge the metal’s further downside, while a move above $1,900 could direct prices towards the resistance line at $1,968.

• Gold price clings to mild gains while extending the week-start rebound from one-month low.
• US Dollar bears the burden of market’s cautious optimism to propel XAU/USD rebound.
• Fed Chair Powell needs to praise recently strong US data to challenge gold buyers.
• US President Biden’s SOTU, Sino-American headlines also eyed for immediate directions.

Gold price (XAU/USD) picks up bids to refresh intraday high near $1,876 while printing a two-day uptrend during early Tuesday. In doing so, the yellow metal extends the week-start rebound from a monthly low as the US Dollar weakness joins cautious optimism in the market to favor the XAU/USD bulls. However, anxiety ahead of the Federal Reserve Chairman Jerome Powell and US President Joe Biden’s State of the Union (SOTU) comments seem to challenge the metal buyers of late.

The mildly positive sentiment could be linked to the comments from US Treasury Secretary Janet Yellen and President Joe Biden which pushed back the US recession concerns. On the same line were the comments from US President Joe Bide which appear to placate the Sino-American fears by saying, “The balloon incident does not weaken US-China relations.”

Alternatively, hawkish Fed talks seem to put a floor under the US Treasury bond yields, as well as the US Dollar. “The strong labor market probably means ‘we have to do a little more work,’” said Federal Reserve Bank of Atlanta President Raphel Bostic in an interview with Bloomberg. It’s worth noting that the firmer US jobs report and activity data for January renewed hawkish Fed bias the last Friday but a lack of directives seem to probe the greenback bulls afterward.

Against this backdrop, S&P 500 Futures print mild gains but the US Treasury bond yields struggle to extend the two-day rebound from the monthly low. It should be observed that the US Dollar Index (DXY) also retreats from the one-month high, marked the previous day, amid sluggish markets.

Looking ahead, gold traders should concentrate on Fed Chair Powell’s capacity praises the latest upbeat US data, as well as US President Biden’s SOTU.

Gold Price Technical Analysis

Gold price rebounds from one-month-old horizontal support surrounding $1,865 backed by an improvement in the oversold RSI (14), as well as the looming bull cross on the MACD.

However, 200-Simple Moving Average (SMA) surrounding $1,880 guards the XAU/USD’s immediate upside.

Even if the gold price stays firmer past $1,880, a three-week-long resistance area around the $1,900 round figure could act as the last defense of the sellers before directing the prices towards the resistance line from mid-January, close to $1,968 at the latest.

Meanwhile, a clear downside break of $1,865 isn’t an open welcome to the gold bears as an upward-sloping support line from December 15, 2022, around $1,850, could challenge the metal’s further downside.”