Gold Price Forecast: XAUUSD jumps to fresh daily high, bulls flirt with 200-DMA ahead of Powell

Gold attracted some dip-buying on Wednesday and rallied nearly $20 from a multi-day low.

The risk-off impulse, sliding US bond yields, modest USD pullback extended some support.

Hawkish Fed expectations kept a lid on any meaningful upside ahead of Powell’s testimony.

Gold reversed an intraday dip to the $1,823 region, or a four-day low touched earlier this Wednesday and shot to a fresh daily peak during the mid-European session. The XAUUSD was last seen trading around the $1,840 region, with bulls now awaiting a convincing break through the very important 200-day SMA.

The overnight optimistic move in the equity markets fizzled out rather quickly amid worries that a more aggressive policy tightening by major central banks would pose challenges to the global economy. Adding to this, the supply chain disruptions caused by the Russia-Ukraine war and the recent COVID-19 outbreak in China have been fueling fears about a potential recession. This continued weighing on investors' sentiment and triggered a fresh wave of the global risk-aversion trade, which, in turn, offered some support to the safe-haven gold.

The anti-risk flow was reinforced by a steep decline in the US Treasury bond yields and held back the US dollar bulls from placing aggressive bids. Apart from this, some repositioning trade ahead of Fed Chair Jerome Powell's testimony before the Senate Banking Committee forced the USD to surrender its intraday gains, which further benefitted the dollar-denominated gold. That said, expectations that the Fed would hike interest rates at a faster pace to curb inflation kept a lid on any meaningful upside for the non-yielding yellow metal.

Hence, investors will closely scrutinize Powell's comments for fresh clues about the policy tightening path. This will play a key role in influencing the near-term USD price dynamics and help determine the next leg of a directional move for gold. This makes it prudent to wait for a sustained move beyond a technically significant 200-DMA before traders start positioning for any further appreciating move for the XAUUSD.

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 GBP/USD rebounds from near two-week low, flat-lined below 1.3100 amid risk-on mood

• GBP/USD witnessed some intraday selling on Tuesday amid renewed USD buying interest.
• Hawkish Fed expectations, rising US bond yields continued acting as a tailwind for the buck.
• A positive risk tone capped gains for the safe-haven USD and helped limit losses for the pair.

The GBP/USD pair quickly recovered a few pips from a near two-week low touched in the last hour and was last seen trading around the 1.3175-1.3180 region, nearly unchanged for the day.

The pair struggled to preserve its modest intraday gains to the 1.3115 region and turned lower for the fifth successive day on Tuesday amid the emergence of fresh US dollar buying. Rising bets for a 50 bps rate hike at the next two FOMC meetings turned out to be a key factor that continued acting as a tailwind for the buck.

The market expectations for a more aggressive policy response by the Fed to combat high inflation was reinforced by elevated US Treasury bond yields. In fact, the yield on the benchmark 10-year US government bond moved back above the 2.5% threshold, or back closer to a nearly three-year peak and underpinned the greenback.

The British pound was further pressured by the overnight dovish sounding remarks by the Bank of England Governor Andrew Bailey, saying that they are seeing evidence of an economic slowdown. Bailey stuck to the tone from this monthly policy decision, wherein officials softened their language on the need for further interest rate hikes.

This was seen as another factor that exerted additional pressure on the GBP/USD pair. That said, a generally positive risk tone, bolstered by hopes for progress in the Russia-Ukraine peace talks, capped the safe-haven USD and helped limit the downside for the GBP/USD pair. This, in turn, warrants some caution for bearish traders.

Hence, the market focus will remain glued to fresh developments surrounding the Russia-Ukraine saga. The incoming geopolitical headlines will influence the broader market risk sentiment. This, along with the US bond yields, will drive demand for the USD and produce some short-term trading opportunities around the GBP/USD pair.

Later during the early North American session, traders will take cues from the US economic docket - featuring the release of JOLTS Job Openings and the Conference Board's Consumer Confidence Index.

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