XAU/USD bears run out of steam near $1,920 despite Fed Powell’s hawkish testimony – Crypto News

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• Gold price remains defensive near the lowest level since March, jostles with three-week-old support.
• Federal Reserve Chairman Jerome Powell advocates for further rate hikes and weighs in on the XAU/USD price.
• Economic, geopolitical fears surrounding China also keep Gold bears hopeful.
• Hawkish Fed concerns seem already priced-in, XAU/USD sellers need positive surprise from United States data to witness further downside.

Gold Price (XAU/USD) licks its wounds at the lowest level in three months, sidelined around $1,935 after bouncing off $1,920 support. In doing so, the XAU/USD justifies the market’s inaction amid mixed statements from the United States Federal Reserve (Fed) and unimpressive updates surrounding the US-China ties and China stimulus. Additionally, broad factors regarding the global central bank actions and a lack of major/events also restrict the Gold Price weakness despite keeping the bears hopeful of late.

Gold Price fails to cheer Federal Reserve Chair Powell’s hawkish testimony

Gold price dropped to the lower level in three months even after Federal Reserve (Fed) Chairman Jerome Powell To install appear hawkish. The reason could be linked to the absence of any fresh comments, as well as contrasting statements from other Fed Officials.

In his bi-annual testimony to the House Financial Services Committee, Federal Reserve (Fed) Chairman Jerome Powell advocated for raising interest rates somewhat further by year-end. The policymaker also exemplified decelerating a car near the destination while saying, “It may make sense to move rates higher, at a more moderate pace.” Even so, the Fed’s Powell mentioned, “We are very far from our inflation target.” That said, most of the statements from Fed’s Powell were replicas of last week’s FOMC statement and hence failed to impress the Gold buyers despite weighing on the US Dollar,

On the contrary, comments from Federal Reserve Bank of Chicago President Austan Goolsbee prod US Treasury yields and the XAU/USD weakness as he said that the decision last week was a close call for him. The central bank has to “do more sniffing” before another rate hike, Fed’s Goolsbee added.

US-China story becomes interesting for XAU/USD traders

US-China tensions keep escalating after US President Joe Biden terms his Chinese counterpart “a dictator”, which in turn weighs on the Gold Price. However, Beijing discards criticism of its behavior on the human rights front but fails to exert downside pressure on the XAU/USD. China hit back on Wednesday after US President Joe Biden referred to President Xi Jinping as a “dictator”, saying the remarks were absurd and a provocation, an unexpected flare-up following attempts by both sides to reduce friction, per Reuters.

Further, growing fears of an economic slowdown in China contrast with hopes of more stimulus to offer a whippy day to the gold traders.

Powell testimony 2.0, central bankers eyed

A lack of major data/events can allow the Gold Price to pare the recent losses with eyes on major central bank decisions in the UK, Switzerland, Indonesia and Mexico. Should these policymakers appear hawkish, the fears of economic slowdown will escalate and allow the Australian sellers to cheer the news. Additionally, Fed Chair Powell’s second round of testimony, this time before the Senate Banking Committee, will also be important to watch for clear directions.

Also read: Forex Today: US Dollar weakens despite Powell; BoE in focus after UK CPI

gold price technical analysis

Gold price struggles with a three-week-long descending support line, around $1,920 by the press time.

That said, the nearly oversold conditions of the Relative Strength Index (RSI) line, placed at 14, suggests bottom-picking of the XAU/USD, which in turn suggests a corrective bounce in the Gold price toward the mid-$1,900s.

However, a convergence of the 200-Exponential Moving Average (EMA) and a downward-sloping trend line from June 02, close to $1,965 by the press time, appears a short-term key hurdle for the XAU/USD bulls to cross.

Following that, a one-month-old horizontal resistance area surrounding $1,985 will be in the spotlight.

On the contrary, a clear downside break of $1,920 could quickly fetch the Gold Price to the $1,900 round figure while any further weakness would make the XAU/USD vulnerable to testing the early March swing high of around $1,858.

Gold Price: Four-hour chart

Trend: Corrective bounce expected