XAU/USD Gold Price Forecast: Jerome Powell's Fed Focus


 Today's gold trading market is seen to be experiencing a "consolidation" phase where gold is seen to be around the $1,950 price level.

A speech by Federal Reserve (Fed) chairman Jerome Powell is scheduled for midnight tonight. As you already know, any indication that will be revealed from Powell can provide a "significant" movement to the market, especially the price of gold.

Middle East Conflict Tensions & Powell's Speech

Until today, the price of gold is seen to continue to show strengthening following the escalating geopolitical risks, especially following the tragic Israeli attack on a hospital in Gaza, which resulted in the death of many, including women and children yesterday.

In addition, a school created by the United Nations (UN) that also accommodates Palestinian refugees was also targeted.

However, the Israel Defense Forces (IDF) did not claim responsibility for the incident. In addition, the President of the United States, Joe Biden, has officially announced yesterday, that the country's readiness to launch full assistance to Israel, both financially and militarily.

The financial market landscape is seen as sensitive to this conflict. In response to this geopolitical pressure the market has witnessed an increase in the price of oil, gold and the United States (US) Dollar which has increased significantly.

The 10-year US Treasury bond (US Treasury 10-year) has also seen a drastic increase since the beginning of last week.

Following the drastic increase in the 10-year US Treasury Bond, market participants expect that the Fed will maintain high interest rates for a longer period.

At yesterday's "Fed Blackout Period" session, New York Fed President John William made a clear statement that interest rates in the country need to be kept high for a long period of time until the Fed's goal of lowering inflation back to the 2% target.

Gold Market Reaction

The price of gold is seen to be doing "bullish consolidation" and is ready to make the next jump if Fed Powell's speech tonight is seen to give the market sentiment a "hawkish" nature.

The market now expects the interest rate in November to be maintained at 5.50% and the expected percentage of the next interest rate increase in December 2023 is likely to be 37%.

Before Fed Powell's speech session takes place, gold market players will also focus on the release of "US Jobless Claims" and "Exisitng Home Sales" data.

Gold Technical Analysis

Gold prices traded above the $1,930 level yesterday referring to the daily price close, but failed to overcome the $1,950 price close on Wednesday.

However, current market risks (geopolitics & the Fed) seem to be more encouraging for gold to rise.

The next hurdle is seen at the $1,970 price level. But if Fed Powell tonight is able to extinguish the bullish sentiment against gold, $1920 & $1910 can be reached.

This price projection will depend entirely on the current sentiment of geopolitics (Israel-Gaza) and Fed Powell's speech.