Gold price is trading lower this Tuesday, down by 0.15% as of writing as the markets get ready for another potential market mover.
The US Federal Reserve’s Chairman Jerome Powell is due to testify before the US House Select Subcommittee on the Coronavirus Crisis. Ahead of his testimony, several members of the governing council of the FOMC have tried to play down the hawkish position assumed by the Fed last week.
On Tuesday, Cleveland Fed Reserve President Loretta Mester said that adjusting monetary policy was not on the cards and preferred to see further progress on employment. She opined that the US economy was not yet at the point where it could face high financial stability risk, adding that the bank would need to look at its communication tools to ensure it did not contribute towards market volatility.
Whether Mester’s comments were a precursor to Fed Chief Powell walking back some of the Fed’s hawkish position is something the markets would be watching out for.
Technical Outlook for Gold Price
With gold price now testing resistance at 1789.49, further direction on the XAU/USD depends on the Fed Chair’s speech. If the Fed Chair walks back on some of the hawkish statements of last week, the gold price could strengthen. Bulls would be looking for a break of 1789.49 to initiate a buying opportunity, targeting 1800.00 initially, before 1815.20 and the price wall between 1828/1840 comes into focus.
On the flip side, a reinforcement of last week’s hawkish stance by the Fed Chief strengthens the greenback. With price now testing resistance, bears would seek a pullback move which targets 1763.30 initially, before a potential drop towards 1741.00 and 1719.13 if the selloff is strong.