Gold price edges higher ahead of Fed Chair Powell’s second testimony

■The Gold price holds positive ground in Wednesday’s early Asian session. 

■Rising Fed rate cut bets continue to lift the yellow metal. 

■The PBoC refrained from buying gold for a consecutive  month, limits XAU/USD upside. 

The Gold price (XAU/USD) trades with mild gains on Wednesday during the early Asian session. The growing speculation that the US Federal Reserve (Fed) is likely to start cutting rates as early as September continues to support the non-yielding metal. Furthermore, political uncertainties within Europe and globally might boost Gold price, a traditional safe-haven asset.

On the other hand, the pause of China's central bank Gold purchases for a second consecutive month might prompt traders to reduce bullish bets in the yellow metal as China is the world's largest gold consumer. Investors will keep an eye on the second semi-annual testimony by Federal Reserve (Fed) Chair Jerome Powell on Wednesday, along with speeches by the Fed's Michelle Bowman and Austan Goolsbee. On Thursday, the US Consumer Price Index (CPI) inflation data will be closely monitored. This data might offer more clarity on the US interest rate path.

Daily Digest Market Movers: Gold price gains ground amid rising Fed rate cut bets

China held its gold reserves steady for the second month in a row in June, after an 18-month period of purchases. Official data from China’s central bank shows its gold reserves holdings at 2,264 tonnes.

Federal Reserve (Fed) Chair Jerome Powell said in testimony Tuesday to Congress that the most recent inflation data showed some modest further progress and "more good data" could open the door to interest rate cuts. 

Powell emphasized that the central bank will continue to make decisions on monetary policy meeting by meeting, adding that holding interest rates too high for too long could jeopardize economic growth. 

Powell further stated that inflation readings over the first three months of this year did not boost Fed officials’ confidence that inflation was coming under control.

Financial markets are now pricing in 74% odds of a Fed rate cut in September, up from 71% last Friday, according to data from the CME FedWatch tool. 

Technical Analysis: Gold price holds bullish in the longer term

The gold price trades on a stronger note on the day following the break above the descending channel. The precious metal maintains its uptrend above the key 100-day Exponential Moving Average (EMA) on the daily timeframe. The upward momentum is also supported by the 14-day Relative Strength Index (RSI), which stands in the bullish zone around 55.0. 

The crucial resistance level for yellow metal will emerge at the $2,400 psychological level. The next hurdle is seen at $2,432, a high of April 12. Sustained trading above this level could set XAU/USD for a potential retest of the all-time high of $2,450.

On the other hand, sustained trading below $2,340, the former resistance level, could draw in enough bearish demand to head $2,318, a low of July 1. The next contention level to watch is $2,274, the 100-day EMA.