Gold (XAU/USD) extended its losses in the Asian session on Wednesday, falling to its lowest level in nearly three weeks. The decline comes as the US Dollar (USD) continues its steady advance, supported by easing expectations of a large Federal Reserve rate cut in September. At the same time, renewed hopes for a breakthrough in Russia-Ukraine peace negotiations are reducing demand for safe-haven assets like gold.
Dollar Strength Caps Gold’s Upside
The greenback gained for a third consecutive day, fueled by last week’s hotter-than-expected US Producer Price Index (PPI), which signaled persistent inflationary pressures. As a result, traders are increasingly ruling out the chances of a jumbo 50 basis point Fed rate cut in September. This outlook is limiting gold’s appeal, with the metal slipping below its 100-day Simple Moving Average (SMA), a level not breached since December 2024.
Russia-Ukraine Peace Hopes Pressure Bullion
Geopolitical developments are also dragging on gold prices. Reports suggest that Russian President Vladimir Putin and Ukrainian President Volodymyr Zelensky could meet soon for direct peace talks, following mediation efforts from the US, EU, and UK. Optimism surrounding these talks has eased safe-haven demand, although ongoing conflict and fresh Russian drone and missile strikes underscore continued uncertainty.
Fed Meeting Minutes and Powell’s Speech in Focus
Investors now turn their attention to the release of the Federal Reserve’s July meeting minutes, due later today, as well as Fed Chair Jerome Powell’s remarks at the Jackson Hole Symposium. Both events are expected to provide further clarity on the Fed’s policy outlook. According to CME’s FedWatch Tool, markets currently expect the Fed to begin cutting rates in September, with two 25 bps reductions priced in by year-end.
Gold Technical Outlook
From a technical perspective, a decisive break below the 100-day SMA would reinforce bearish momentum. This could push gold below the $3,300 level, with the next major support zone seen near $3,270–$3,265. A failure to hold above this zone could trigger deeper losses toward $3,250 and possibly the $3,200 handle.
On the upside, immediate resistance lies around $3,335, followed by the weekly peak near $3,358. A breakout above these levels could fuel short-covering, with the next key target at $3,375 and then the $3,400 psychological mark. A sustained rally could even test the upper boundary of the broader range around $3,434–$3,435.
Outlook
Gold remains under pressure from a firm US Dollar and easing geopolitical risks, with traders waiting for clear signals from the Fed before taking fresh positions. While the near-term outlook tilts bearish, any renewed geopolitical escalation or dovish Fed signals could quickly revive safe-haven demand for bullion.
🔗 Stay updated with the latest forex and commodity market trends at www.dailygold.pk