The yellow metal which has negative correlation (move in opposite directions) to the US Dollar was edging higher due to slightly less hawkish commentary from Fed Chair Jerome Powell. Gold price rallied hard, even though the resurgent US dollar demand on Thursday, as the dovish BOE rate decision added to the Fed’s push back of the lift-off bets.

There was a rebound in the US dollar yesterday after the US Federal Reserve repeated that it saw high inflation as transitory and announced on Wednesday a $15 billion monthly cut to its $120 billion in monthly purchases of Treasuries and mortgage-backed securities.

But later Chairman Jerome Powell said he was in no rush to hike borrowing costs which negatively impacted the US dollar.

Saxo Bank analyst Ole Hansen said that “Gold is trying to recover some of yesterday’s losses and the market is taking some comfort from the fact that there was no strong signal with regards to future rate hikes from the Fed.”

Independent analyst Ross Norman said strong physical demand for gold was supporting market, as India’s Diwali festival generally boosts sales of the precious metal.

Whereas The Bank of England unveiled its monetary policy decision on Thursday, keeping rates on hold despite the market’s speculation of a rate hike. Just 2 out of 9 MPCs voted for a hike which has disappointed investors.

XAU/USD 4 Hour Chart:

Support: 1774.2 (S1), 1756.6 (S2), 1744.2 (S3).

Resistance: 1804.1 (R1), 1816.5 (R2), 1834.1 (R3).

Gold is trading high now and the traders are eagerly waiting for the US Nonfarm payrolls data for a fresh direction, in the meantime we expect a bullish trend for XAU/USD.