- Fed Chairman Powell adopts a cautious tone in his speech.
- US Dollar Index extends daily losses toward 95.
- Gold remains on track to close the week higher.
The XAU/USD pair took advantage of the broad-based USD weakness and rose above the critical $1200 handle to refresh its highest level since August 13 at $1204. At the moment, the pair is up $18 on the day at $1203.
In his speech at the Jackson Hole Symposium, the Federal Reserve Chairman Jerome Powell said that the inflation was not showing any signs of accelerating above 2% and added the there was no elevated risk of the economy overheating. Although Powell’s comments didn’t offer any major surprises regarding the monetary policy outlook, markets assessed his tone as less hawkish when compared to his last FOMC press conference. The US Dollar Index fell to a daily low at 95.03 with the initial reaction and started retracing its losses. At the moment, the index is down 0.4% on the day at 95.25.
In the meantime, Wall Street started the day on a positive note to reflect an improved market sentiment, which could make it difficult for the safe-haven precious metal to continue to gather strength against the buck. As of writing, the Dow Jones Industrial Average and the S&P 500 indexes were both up 0.5% on the day.
Earlier today, the data from the U.S. showed that durable goods orders contracted by 1.7% in July following June’s 0.7% increase. However, markets remained focused on Fed speaks and largely ignored the data.
Technical levels to consider
After recording losses in the previous six weeks, the pair remains on track to close the week in the positive territory. On the upside, resistances could be seen at $1212 (Aug. 13 high), $1222 (50-DMA) and $1234 (Jul. 25 high). Supports align at $1200/$1198 (psychological level/20-DMA), $1187 (Aug. 21 low) and $1173 (Aug. 15 low).
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