Gold price (XAU/USD) rose sharply as Middle East tensions kept escalating and the Federal Reserve (Fed) Chair Jerome Powell endorsed a stable interest rate policy in his speech on Thursday. The demand for bullion strengthened as Israeli troops prepared to enter the Gaza strip with the goal of dismantling Hamas, the Palestinian military group. Meanwhile, despite the promise of humanitarian aid for civilians in Gaza by US President Joe Biden, Iran could step in and intervene directly in the conflict, which could turn into a feared Middle East regional war. On Thursday, Fed Chair Jerome Powell joined his teammates – Philip Jefferson, Austan Goolsbee, Michael Barr, and Raphael Bostic – and delivered neutral guidance on interest rates in his speech at the Economic Club of New York. Powell acknowledged that multi-year high US Treasury yields are significantly impacting overall spending and investment.
In an interview with CNBC, Atlantic Fed Bank President Raphael Bostic said that a slowdown is coming due to higher interest rates but the economy won’t see a recession. Bostic remains confident that the central bank will get inflation under control. He forecasted that the Fed would cut interest rates in late 2024. Philadelphia Fed Bank President Patrick Harker, in an interview on Friday, favored holding interest rates as the economy is softening than thought. Gold price extends upside to near $1,990.00 amid multiple tailwinds. The precious metal is on a three-day winning streak and is expected to recapture a five-month high of around $1,987.00. The ultimate resistance for the Gold price is seen at $2,000.00. The 20 and 50-day Exponential Moving Averages (EMAs) have climbed above the 200-day EMA, which indicates that the upside bias has strengthened. The Relative Strength Index (RSI) (14) climbs above 60.00, warranting more upside in the Gold price amid the absence of divergence and overbought signals.
