Gold bulls encountering difficulties due to investor concern regarding forthcoming interest rate guidance and the speech by Federal Reserve Chair Jerome Powell. Recent remarks by Federal Reserve policymakers supporting additional policy tightening have pressured the precious metal.
Hawkish Fed Grabbed XAUUSD Sellers' Attention
On Tuesday, Fed policymakers Michelle Bowman and Neel Kashkari issued hawkish guidance on interest rates, expressing concern over persistent inflation due to the US economy's resilience. In contrast, Chicago Fed President Austan Goolsbee maintains optimism regarding the deceleration of inflation. According to him, the subject of deliberation should be the appropriate magnitude and duration of interest rate increases.
The interest rate outlook remarks of Jerome Powell are anxiously anticipated by investors. Disagreements among Fed policymakers are highlighted in the report, with Michelle Bowman endorsing additional policy tightening to promptly return consumer inflation to 2%.
Pitching a robust labor market, Neel Kashkari stresses the importance of averting a resurgence in inflation. In contrast, Austan Goolsbee anticipates a decline in inflation within the next two months and identifies substantial progress in this regard.
According to the CME Group Fedwatch tool, there are substantial wagers that interest rates will remain unchanged within the range of 5.25%-5.50% through the conclusion of 2023, notwithstanding the prevailing tendency towards additional policy tightening.
Gold (XAUUSD) Technical Analysis
In the daily XAUUSD price chart, a potential Head and Shoulders pattern is visible above the August 2023 high, with a neckline break at the 1969.66 level.
Moreover, the dynamic 20 EMA moved above the price, which came with a valid strong bearish daily close. The MACD Signal line formed a bearish crossover in other technical indicators, while the RSI moved at the 50.00 line.
Based on the daily outlook of XAUUSD, a bearish continuation is potent, where the immediate support level is at 1932.23 level.
On the other hand, the current price trades within the premium zone of the October-November peak, which needs to come below the 1910.02 Fibo level, before offering sustainable buying pressure.