Gold prices took a further sprint to the north after the US Dollar fell on Wednesday, following comments by Fed Reserve Chairman Jerome Powell said that the economic recovery was “still a ways off” from levels required for tapering.
The testimony by the Fed Chair followed another hotter-than-expected consumer inflation report that had fueled speculations about tapering of the quantitative easing program.
The Fed’s governing board members have variously insisted that the rise in inflation was transitory, a position in which the consistently higher inflation numbers are challenging.
The RBNZ and BoC have started to taper their QE programs, but Fed Chair Powell’s testimony shows that the FOMC still believes the inflationary pressure was fleeting. Powell promised full support until the recovery in the US economy was complete.
These comments pressured the greenback, allowing gold prices to rise 0.61%.
Technical Outlook for Gold Price
The XAU/USD daily chart shows gold price action challenging the price resistance wall at 1828/1840. A break of this area opens the door towards the 1860.77 price mark. Above this level, 1881.68 and 190.95 serve as additional price targets, with the latter being the site of the recent highs seen in June.
On the other hand, a failed challenge of the resistance wall sets up a pullback towards the 1815.20 support, with 1789.49 and 1763.30 lining up as potential downside targets.