Gold price extended its gains on Thursday as the market digested Jerome Powell’s remarks regarding the Fed’s interest rate hikes. With November’s nonfarm payrolls data set for release on Friday, the focus will be on whether the bulls will yield enough momentum to break the resistance at $1,800 per ounce.
In his speech on Wednesday, Jerome Powell noted that Fed officials still have to work hard to deal with high inflation. In the same breath, he signalled that the central bank may ease on its aggressive interest rate hikes from “as soon as December”.
A look at the market’s reaction shows that investors choose to focus on the dovish remarks regarding rate hikes. However, the rest of the Fed Chair’s speech pointed to interest rates remaining higher for longer.
In the ensuing sessions, further decline in the US dollar may boost the bulls’ efforts to push gold price past the crucial resistance zone of $1,800. As is the case with other dollar-priced assets, the precious metal tends to move inversely to the value of the greenback.
Gold price prediction
Gold price recorded its first month of gains in November after seven consecutive months in the red. Indeed, on Thursday, it edged closer to retesting the psychologically crucial zone of 1,800. The aforementioned level, which was previously a steady support zone, has been evasive to the bulls since mid-August.
As at the time of writing, the precious metal was trading at 1,789.44; up by 1.21%. On its daily chart, it is trading above the 25 and 50-day exponential moving averages. Besides, it is an inch away from the overbought territory at an RSI of 69.
While I expect gold price to record further gains in the ensuing sessions, it will likely ease before rising higher. This may mean it hovering around the crucial zone of 1,800 with the next bullish targets being at 1,820 and 1,834.07.
Even if it pulls back from its current level, it will likely find support along the 25-day EMA at 1,733. Below this level, this bullish thesis will be invalid.