Last Friday's blowout employment report from the United States sparked significant hawkish repricing around the monetary policy path, now embracing the Fed's terminal rate projection. CME's FedWatch Tool assigns the highest probability to rates peaking at 5.25% (from 5.0% previously), pointing two more 25 bps hikes. Expectations for rate cuts within the year moderated, but there is still room for such an outcome. 
During yesterday's appearance, Chair Powell said that he was surprised by how strong Friday's jobs report was, but this did not seem to change his messaging much. He believes that financial conditions are now "more well-aligned" with the central bank's view on rates and overall retained his hawkish stance. He also warned of potentially more rate increases than what is priced in, if we continue to get "strong labor market reports or higher inflation reports". 
Once again though, he did not offer anything overly hawkish and did not appear to be particularly forceful nor assertive, speaking a lot about the "disinflationary process" which has begun. This allowed markets to focus on the dovish parts of his speech and the USDollar is under pressure.
XAU/USD had slumped at the end of the previous week due to the NFP-fueled rate expectations repricing and breached the critical EMA200 (black line) and the 23.6 Fibonacci of its 2022 low/2023 highs advance. This creates risk for further losses to the 38.2% level (1,823-7), but we struggle to see sustained weakness below this region.
Despite the recent decline, XAU/USD runs a profitable week as Chair Powell was once again not overly hawkish and retakes the EMA200. As such, we can see a rebound back above 1900-09, although a catalyst will be required for higher highs (1,959).
Senior Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.
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