Now, investors await Jerome Powell’s speech at an IMF seminar

Gold prices managed to settle above the 20-DMA due to a retreat in the dollar seen these days. The greenback tried to stage a reversal on Wednesday but failed, resuming the decline today. Against this backdrop, the dollar-denominated commodity bounced from this week’s lows around $1,720, to register three-week highs in the $1,747 area. As such, the $1,750 figure represents the immediate target for gold bulls for the time being. 

The dollar is marginally lower versus major counterparts on Thursday but the downside momentum still looks limited, with the bullish trend remaining intact. Therefore, the bullish potential in gold prices could be capped in the short term. If so, the immediate support is now represented by the 20-DMA that arrives at $1,729 while the key hurdle for sellers lies at $1,700. On the upside, a decisive break above the $1,755 area would pave the way towards $1,770. However, this scenario looks unlikely at the moment.

Yesterday’s FOMC meeting minutes underscored the Fed’s dovish stance, adding to the downside pressure surrounding the greenback. Now, investors await Jerome Powell’s speech at an IMF seminar. The Federal Reserve governor will likely share his views on global recovery and the monetary policy outlook. Another dovish signal from this front could cap fresh recovery attempts in the dollar. In this scenario, the bullion could register fresh highs by the end of the day. The US weekly initial jobless claims data will also be closely eyed.

In a wider picture, the US macro outperformance narrative is set to continue, suggesting the USD index will resume the ascent following the current technical correction. In other words, the medium-term outlook for gold prices remains cloudy, with the $1,700 figure being at risk. Besides, the risk-on sentiment and the potential uptick in the US Treasury yields might cap more robust upside in the gold market.


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