Gold prices

Gold Price: Can Fed Chair Powell Stop XAU/USD from Plunging Below $1700?

Gold price may have rebounded slightly this Thursday, but it remains under pressure as it continues to get squeezed by rising US bond yields. Today’s speech by Jerome Powell remains the fundamental triggers of note for the XAU/USD pair. 

Gold price has edged slightly higher in what has been a day of muted trading, as investors await the speech of Fed Chair Jerome Powell at a Wall Street Journal online event. This comes as Credit Suisse continues to see the risk of a serious plunge in gold prices on the back of rising real bond yields. 

This Thursday, rising yields have led to sustained demand for the greenback, severely limiting the capacity of bulls to create more upside on the XAU/USD pair. 

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The focus of Powell’s speech would be on the risk that rising long-term borrowing costs would have on the US economy. Any language that shows concern on the part of the Fed would be a dampener for the USD, allowing gold prices to recover further. If Powell makes no comments on this or expresses views that suggest that rising bond yields are a sign of investor confidence in the US economy, gold prices could be hit hard. 

Technical Levels to Watch

On Wednesday, the XAU/USD hit the support target at 1699.43. This support remains intact as bulls forced a bounce and subsequent uptick on Thursday. This uptick could target 1714.68 as the initial target. Other targets to the upside include 1741.01 and 1763.30. Any of these could be points where additional selling could ensue. 

On the other hand, a breakdown of the 1699.43 support allows 1638.49 to come into the picture, with additional downside targets at 1600.70 (8 January 2020 high) and the August/September 2019 double top at 1559.84.

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Gold Price (XAU/USD) Daily Chart

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