Gold price falls slightly from near record highs ahead of Fed Powell’s testimony

• Gold price drops slightly as the focus shifts to Fed Powell’s testimony.
• The appeal for the US Dollar weakens as February’s PMI figures cast doubts over the strong US economic outlook.
• US ADP Employment and JOLTS Job Openings data will provide fresh cues over job growth.

Gold price (XAU/USD) edges down in Wednesday’s European session after failing to recapture the all-time high of around $2,145.00. The precious metal is expected to stay on the sidelines as investors await Federal Reserve (Fed) Chair Jerome Powell’s testimony before Congress, starting at around 15:00 GMT.

Investors expect that Jerome Powell will support keeping interest rates in the range of 5.25%-5.50% until he gets evidence that inflation will return to the desired rate of 2%. Non-yielding assets, such as Gold, face outflows when the Fed favors a hawkish interest rate stance for an extended period.

Market participants will also focus on the United States ADP Employment Change and JOLTS Job Openings data for February and January, respectively, which will provide more insights into labor demand.

Daily digest market movers: Gold price awaits Fed Powell’s guidance on interest rates

• Gold price falls slightly from a near record high of $2,141.85 amid caution among market participants ahead of Federal Reserve Chair Jerome Powell’s testimony before Congress. Investors will keenly watch the guidance from Jerome Powell on inflation, the labor market, and interest rates. 
• While market participants want to know about the time frame and the degree of rate cuts this year, Powell is likely to be reluctant to offer in-depth information on rate cuts. Fed policymakers are less likely to focus on policy normalization before gaining confidence that inflation will come down to the 2% target. The Fed wants to see inflation declining for months as evidence before considering rate cuts.
• Jerome Powell is expected to maintain hawkish rhetoric as the progress in price pressures decelerating towards the 2% target is slow and labor market conditions are resilient.
• Powell’s guidance will impact market expectations for rate cuts in the June policy meeting. As per the CME Fedwatch tool, the chances for a 25 basis points (bps) rate cut for June’s policy meeting have increased to 58% from 53% on Tuesday.
• Apart from Powell’s testimony, market participants will focus on the US ADP Employment Change for February and JOLTS Job Openings for January, which will be published at 13:15 and 15:00 GMT, respectively. US private employers are forecasted to have hired 150K job-seekers against the prior reading of 107K and have posted 8.9 million new job openings in January against 9.027 million in December.
• The US Dollar Index (DXY), which measures the Greenback’s value against six major currencies, continues its losing spell for the fourth trading session on Wednesday. The USD Index hovers near a weekly low of around 103.60 as weak ISM Manufacturing and Services PMIs for February have pointed to slowing economic growth.

Technical Analysis: Pound Sterling consolidates around $2,125

Gold price falls gradually after failing to test the all-time high near $2,145. The yellow metal trades inside Tuesday’s trading range. The near-term appeal for Gold remains bullish as it has delivered a breakout of the Symmetrical Triangle pattern formed on a daily time frame. The breakout of the aforementioned chart pattern exhibits a volatility expansion, which leads to wider ticks on the upside and heavy volume.

The 14-period Relative Strength Index (RSI) holds above 60.00, indicating a bullish momentum ahead. The RSI (14) is not showing any divergence signals but has reached overbought territory.