Gold Price Forecast: XAU/USD hits seven-month highs following Powell’s remarks

• The price of Gold rallied to a new multi-month high of $2,060.62 following Powell’s speech.
• Federal Reserve Chairman Jerome Powell’s remarks on weak inflation data and high underlying inflation boost Gold’s appeal.
• US interest rate expectations now include nearly 135 basis points of Fed rate cuts by the end of 2024, as indicated by money market futures.

The price of Gold reached a new seven-month high in the middle of the North American session after US Federal Reserve Chairman Jerome Powell welcomed the newly released inflation data, although he stressed that core inflation “remains too high.” At the time of writing these lines, the pair XAU/USD It is trading around $2,059, with a gain of more than 1.10%.

XAU/USD extended gains despite Powell’s neutral stance

During a Q&A session, Fed Chair Powell said, “We (Fed) are getting what we wanted to get,” giving the green light to bullion traders, who took advantage of the XAU/USD drop to the $2,044.50 area, before jumping to new daily and multi-month highs. Meanwhile, US Treasury yields plummet, with the 10-year Treasury yield falling six and a half basis points to 4.263%, after peaking at 4.349%, a tailwind for gold prices.

Consequently, the Dollar falls, as revealed by the Dollar Index, which measures the currency against six peers, down 0.24%, to 103.26.

Meanwhile, money market futures show investors expect about 135 basis points of Fed rate cuts by the end of 2024.

Previously, the Institute for Supply Management (ISM) released manufacturing PMI figures for November, which showed that business activity remains in contraction for the 13th consecutive month. Prices paid for manufacturing rose while the employment index fell, in line with recent jobless claims data.

XAU/USD Price Analysis: Technical Outlook

Gold is rallying strongly, with buyers targeting new highs of $2,081.82. It should be noted that there are no additional resistance levels in its path, apart from the $2,060 and $2,070 areas. Once these psychological levels are surpassed, the ATH would be within reach. On the other hand, first support lies at the daily high of November 29 at $2,052.13, before opening the door to the daily low of November 30 at $2,031.58.