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Gold Price Prediction: XAU/USD tests $1,880 as the US Dollar retreats in advance of Fed Chair Powell's speech

Daniel Rogers

Feb 07, 2023 15:38

 截屏2022-06-07 下午5.15.00.png

 

During early Tuesday trading, the gold price (XAU/USD) gains bids to retest the intraday high near $1,876 while printing a two-day rise.

 

In doing so, the precious metal extends its recovery from a monthly low at the start of the week, as the US Dollar's weakness combines with cautious optimism in the market to favor XAU/USD bulls. However, apprehension in front of Federal Reserve Chairman Jerome Powell and US President Joe Biden's State of the Union (SOTU) remarks appears to be challenging metal buyers recently.

 

The modestly optimistic feeling could be attributed to Treasury Secretary Janet Yellen and President Joe Biden's remarks that pushed back US recession fears. In a similar vein, US President Joe Biden's remarks that "the balloon incident did not damage US-China relations" appeared to allay Sino-American concerns.

 

On the other hand, hawkish Fed comments appear to support US Treasury bond yields and the US Dollar. In an interview with Bloomberg, Federal Reserve Bank of Atlanta President Raphael Bostic stated, "The robust job market presumably suggests 'we have a bit more work to do.'" Notably, the stronger US jobs report and activity statistics for January rekindled the Fed's hawkish stance last Friday, but a lack of directions appeared to test the USD bulls subsequently.

 

In this environment, S&P 500 Futures post modest gains, as US Treasury bond rates struggle to extend their two-day recovery from the monthly low. Observe that the US Dollar Index (DXY) has likewise retreated from the one-month peak it reached the day before amid lackluster market conditions.

 

Gold traders should focus on Fed Chair Powell's ability to compliment the most recent good US data as well as US President Biden's State of the Union address.


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