XAU/USD defends key $2,470 support with eye on Powell’s speech

• the old price holds the late recovery from Thursday Friday, looking forward to Powell’s speech in Jackson Hole.
• The US dollar is back in the red with Treasury yields on dovish Fed bets and USD/JPY selling.
• The price of gold remains poised to recover $2,500, based on Powell’s dovish words and bullish technicals.

The price of gold returned to the green early Friday, adding to Thursday’s late rally. Gold’s rebound could be linked to a resumption of the US dollar’s (USD) decline, in the face of fresh USD/JPY selling and negative US Treasury yields.

Gold price points to Powell’s speech for fresh advance

Markets remain risk-averse so far in Asian trading on Friday as they await US Federal Reserve (Fed) Chairman Jerome Powell’s appearance in Jackson Hole for further clues on the central bank’s interest rate path , especially if traders are pricing in aggressive Fed rate cuts. signs of weakening labor market conditions.

Risk-off flows boost safe-haven demand for US government bonds, pushing Treasury yields across the curve and thus pulling the USD lower. The greenback is also bearing the brunt of the renewed USD/JPY selloff following raucous remarks from Bank of Japan (BoJ) Governor Kazuo Ueda to parliament on Friday.

Ueda reiterated his commitment to raise interest rates if inflation stays on course to sustainably reach the 2.0 percent target, but remained cautious about volatile financial markets.

Despite the latest rally, gold looks set for its second straight weekly loss as a September Fed rate cut is a done deal. However, Fed Chairman Jerome Powell’s comments are key to gauging the extent of expected easing in the coming months.

The price of gold corrected about 1 percent on Thursday after the U.S. dollar bounced back firmly from more than a year lows against its main rivals as risk sentiment deteriorated on lackluster data from S&P Global Business in the U.S. and of data on claims for compensation. Additionally, traders resorted to repositioning ahead of Powell’s showdown in Jackson Hole on Friday.

Gold Price Technical Analysis: Daily Chart

The short-term technical outlook for the gold price remains in favor of buyers as long as the triangular resistance turned support, now at $2,470, holds.

Note that the price of gold produced a symmetrical triangle breakout last week, while the 14-day Relative Strength Index (RSI) points north above 50.

These technical indicators suggest that bullish potential remains well in place for gold prices.

On the other hand, if gold buyers recover the record level of $2,532, the next relevant target is seen at the $2,550 level.

Acceptance above the latter could challenge the round level of $2,600 en route to the triangle target measured at $2,660.

If the gold price correction resumes, immediate support is seen at the aforementioned triangle resistance turned support at $2,470.

A violation of the latter will require a test of. Further south, the psychological barrier of $2,450 will come to the rescue of Gold bullies.