Gold price consolidates below all-time high, awaits Fed Chairman Powell’s speech

• The price of gold remains capped in a narrow trading band, although the downside remains cushioned.
• Bets on another 50 bps Fed rate cut in November cap the USD and provide support for XAU/USD.
• Geopolitical tensions continue to act as a tailwind ahead of speeches by influential FOMC members.

The price of gold (XAU/USD) is extending its sideways price consolidation for a second day in a row on Thursday and remains within striking distance of the previous day’s record high. Traders are opting to stay on the sidelines ahead of Federal Reserve (Fed) Chairman Jerome Powell’s speech today, which will be scrutinized for clues about the pace of future interest rate cuts. This, in turn, will play a key role in determining the next stage of a directional move for the unyielding yellow metal.

Meanwhile, bets on another excessive rate cut by the US central bank are failing to help the US dollar (USD) capitalize on the previous day’s solid recovery from near YTD lows. Apart from this, rising tensions in the Middle East and concerns about China’s economic recovery despite its latest stimulus plans are acting as a tailwind for gold prices. That said, the slightly overbought conditions on the daily chart warrant caution before positioning for any further appreciation moves.

Daily Digest Market Movers: Gold bulls await Fed Chair Jerome Powell’s speech before placing new bets

• The US dollar is struggling to capitalize on Wednesday’s strong recovery gains amid subdued expectations of the Federal Reserve, which in turn continues to support the underperforming gold price.
• Several Fed officials this week tried to play off bets on more aggressive easing, although markets see a 50-basis-point rate cut in November as more likely.
• Therefore, Fed Chairman Jerome Powell’s speech later this Thursday will be closely watched for fresh clues on the future path of rate cuts and to determine the near-term trajectory for XAU/USD.
• US macro data – final Q2 GDP print, weekly initial jobless claims, durable goods orders – and speeches from other influential FOMC members should also provide a boost.
• Meanwhile, the latest optimism led by a new round of Chinese stimulus measures announced this week is fading amid doubts about its impact and worries about a global economic downturn.
• Moreover, investors remain concerned about the risk of a further escalation of geopolitical tensions and wider conflict in the Middle East, providing support to the safe-haven precious metal.

Technical Outlook: Gold price could attract buyers on the downside near $2,625, return to ascending channel

From a technical perspective, the Relative Strength Index (RSI) on the daily chart indicates overbought conditions and prevents bulls from placing new bets. That said, this week’s breakout through a short-term uptrend channel suggests that the path of least resistance for gold prices remains up. Therefore, the reduced price action within the range could still be classified as a consolidation phase before the next stage.

Meanwhile, dips towards the breakout point of the ascending channel resistance around the $2,625 region could be seen as a buying opportunity and remain capped near the $2,600 level. A convincing break below the latter could trigger some technical selling and pull the gold price towards the $2,575 region en route to the $2,560 area and resistance turned support at $2,535-2,530.