Gold remains bid above key technical levels ahead of Powell testimony

• Gold trades above 50-day MA and ascending trendline. 
• Powell to stick to approach of gradually lifting rates.

Gold (XAU/USD) retreated from the overnight high of $1,341 to $1,335, tracking the recovery in the dollar index (DXY) from 89.43 to 89.70.

However, it is still trading above the 50-day moving average (MA) of $1,332. Further, the ascending trendline (drawn from the Dec. 12 low and Feb. 8 low) support is intact. The short-term bullish setup indicates the investors expect the new Fed chair Powell to stick to the approach of gradually lifting rates, despite indications that inflation is perking up.

That said, the trendline support could be breached if Powell sees a reason to raise rates more than three times this year. It is worth noting that the XAU/USD risk reversals have turned negative, suggesting a rise in demand for XAU puts (sell gold or bearish bets on gold). So, investors could be seeking downside protection against the long spot positions. 

Powell will make his first major appearance as head of the Federal Reserve before the House Finance Committee on Tuesday at 10 a.m. ET., according to CNBC report. 

Gold Technical Levels

A break below $1,332 (50-day MA) would expose the previous day's low of $1,327, under which a major support is seen at $1,320.97 (Feb. 22 low). On the other hand, a move above $1,341.07 (previous day's high) would open up upside towards $1,344.75 (Jan. 15 high) and $1,351.40 (Feb. 19 high).