Gold price is trading listlessly, consolidating below the eight-month high of $1,881 amid quiet trading this Wednesday. Gold price replicates the move seen during Tuesday’s Asian session amid a pause in the United States Dollar (USD) downside momentum.

Federal Reserve Chair Jerome Powell fails to lift US Dollar

The United States Dollar is extending its downside consolidative mode into the second day on Wednesday. Risk flows remain in vogue and weigh negatively on the safe-haven US Dollar as investors breathe a sigh of relief after US Federal Reserve President Jerome Powell refrained from touching upon monetary policy outlook while participating in a panel discussion at a Riksbank event on Tuesday. Markets expected Federal Reserve Chair Powell to maintain its hawkish stance, pushing for higher rates for longer to battle inflation.

Gold price replicates Tuesday’s Asian trading move so far this Wednesday.

Investors anticipated Powell to join the chorus of his colleagues, especially after San Fransisco Fed President Mary Daly and Atlanta Federal Reserve President Raphael Bostic boosted expectations of a peak rate above 5.0% later this year. Meanwhile, Federal Reserve Governor Michelle Bowman said on Tuesday that the United States central bank would have to raise interest rates further to combat high inflation, likely leading rates further to combat high inflation and that would lead to softer job market conditions. His comments did little to alleviate the bearish pressure on the US Dollar, which allowed the Gold price to hold the higher ground.

However, the downside in the US Dollar remained cushioned, courtesy of a recovery in the United States Treasury bond yields across the curve. The risk rally on global markets drained flows from the US government bonds, spiking up the US Treasury bond yields. The benchmark 10-year US Treasury bond yields rebounded after testing the key 3.50% level.

Gold price awaits United States Consumer Price Index data

With Federal Reserve Chair Jerome Powell’s appearance out of the way, all eyes remain on the critical United States Consumer Price Index (CPI) data due to be published on Thursday. The US calendar lacks any high-impact economic release on Wednesday; therefore, Gold traders will refrain from placing any big directional bets ahead of the key US data.

Gold price technical analysis: Daily chart

The US Consumer Price Index is seen easing to 6.5% YoY and 0% MoM in December, while the Core figures are seen at 5.7% and 0.3%, respectively, in the reported period. The continued softening of the US Consumer Price Index (CPI) could allow the Federal Reserve to slow down its tightening pace. The US Consumer Price Index holds the key to determining the Federal Reserve’s policy move as soon as the start of next month.

At the moment, markets are pricing roughly 80% odds of a 25 basis points (bps) rate hike by the Federal Reserve at its February policy meeting, the CME Fed Watch Tool showed.

Fed Chair Jerome Powell offers relief to markets, keeps US Dollar on the back foot.

Nothing has changed technically for the Gold price, as bulls keep looking out for acceptance above the multi-month peak at $1,881.

The $1,900 threshold will be next in sight of Gold buyers, above which doors will open toward May 2022 high at $1,910.

US Treasury bond yields ease as Gold price awaits the United States Consumer Price Index data.

The 14-day Relative Strength Index (RSI) is seen lurking beneath the overbought territory, keeping bulls hopeful.

Adding credence to the bullish potential, the upward-sloping 50-Daily Moving Average (DMA) managed to close Tuesday above the mildly bearish 200DMA, confirming a Golden Cross.   

On the flip side, failure to yield a daily closing above the $1,880 level could offer much-needed respite to Gold sellers. Friday’s low at $1,865 will be the immediate support thereon.  

Further down, the $1,850 psychological level will be a tough nut to crack for Gold bears.