XAU/USD Forecast: Gold down but not out as Powell speech looms

• Gold price keeps its range near record highs early Thursday, awaiting Fed Chair Powell.
• The US Dollar stalls the previous turnaround with Treasury bond yields, as risk rebounds.
• Extremely overbought conditions on the daily chart continue to caution Gold buyers.  

Gold prices remain in a consolidative state, with prices remaining just below the record high of $2670 that was achieved on Wednesday. This is due to the fact that buyers are becoming more cautious in anticipation of a series of lectures from US Federal Reserve (Fed) policymakers scheduled for later on Thursday.
Will the speech delivered by Powell result in a sustained decline in the price of gold?
The size of the next interest rate cut will be determined by the pre-recorded opening remarks of Fed Chairman Jerome Powell, who will be one of several Fed officials who will be on the rostrum. Markets are currently pricing in a 62% likelihood that the Fed will reduce the rate by an additional 50 basis points (bps) in November.
The dovish Fed outlook was further bolstered by the recent commentary from Fed Governor Adriana Kuglar, who stated during her overnight appearance that she “strongly supported” the Fed’s decision to reduce interest rates by a half point last week. Kugler also stated that she “will continue to advocate for further rate reductions in the future.”
Recent Fedspeak, in conjunction with lackluster US Conference Board (CB) Consumer Confidence and regional activity data, has increased the likelihood of another jumbo rate cut by the Fed at its upcoming policy meeting.
The previous recovery in the US Dollar (USD) and the US Treasury bond yields was halted by the Fed’s dovishness and China’s stimulus optimism, which also fueled a minor increase in the price of gold. This occurred early Thursday. The impending Federal Reserve commentaries will determine the future of the gold price, as traders are hesitant to place additional bets in the face of the daily chart’s extreme overboughtness.
Prior to the Fedspeak, the weekly Jobless Claims, final Q2 Gross Domestic Product (GDP), and US Durable Goods Orders will offer trading incentives to the Gold price. Risk sentiment will also be a critical factor, as the attention will transfer to the US Personal Consumption Expenditures (PCE) Price Index release on Friday following Powell’s remarks.
The US Dollar staged a remarkable rebound from 14-month lows against its major rivals, as the gold price temporarily pulled back from all-time highs amid fading Chinese stimulus-led market optimism. Additionally, traders are utilizing USD shorts to generate profits in anticipation of Fed Chair Jerome Powell’s highly anticipated speech.