Gold prices continued to slide for the second consecutive day, weighed down by a stronger US Dollar and reduced expectations of aggressive rate cuts by the Federal Reserve (Fed). This downward pressure on gold prices comes as traders await pivotal cues from Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium later today. Powell’s remarks are expected to provide fresh insights into the central bank’s policy direction, particularly regarding the potential for rate cuts, which will influence both the US Dollar and gold prices in the short term.
Gold Faces Pressure as USD Strengthens and Fed Rate Cut Bets Ease
Despite a modest rally from the previous day’s low, gold is struggling to maintain bullish momentum. The US Dollar had been on a steady rise, reaching a two-week high, as markets adjust their expectations for the Fed’s policy stance. Diminishing odds for a significant rate cut by the Fed have added support to the USD, making gold less attractive as a non-yielding asset. Although expectations still favor a rate cut in September, traders remain cautious ahead of the highly anticipated Jackson Hole speech.
FOMC Minutes and Economic Data Shape Market Sentiment
Last week’s hotter-than-expected US Producer Price Index (PPI) data has strengthened inflationary concerns, which in turn has reduced the probability of aggressive Fed rate cuts. Fed officials have expressed caution about easing monetary policy amid persistent inflationary pressures, and some, like Kansas City Fed President Jeffrey Schmid, have emphasized the need for a “modestly restrictive” policy to combat inflation. The job market has also shown signs of weakening, further complicating the Fed’s decision-making process. With the Fed’s next meeting in September, the central bank’s stance will remain a focal point for traders.
Key Levels to Watch: Support Near $3,315 and Resistance at $3,348
Gold is finding some support near the $3,315 area, with the 100-day Simple Moving Average (SMA) acting as a critical technical level. A break below this level could trigger further selling, potentially pushing gold toward the $3,270–$3,265 region. However, if gold manages to reclaim the $3,348–$3,350 range, it could see a short-covering rally, pushing prices higher toward $3,375 and eventually $3,400. A sustained move above $3,400 could pave the way for a test of the $3,434–$3,435 resistance zone.
Conclusion: Watch Powell’s Jackson Hole Speech for Key Market Cues
As traders await Jerome Powell’s Jackson Hole speech, gold’s next move largely depends on the Fed’s outlook on interest rates and its response to persistent inflation. A hawkish tone from Powell could strengthen the USD further and pressure gold, while a dovish stance may provide some relief to the precious metal. For now, gold remains in a consolidation phase, with support at $3,315 and resistance at $3,350, but the market will remain volatile as fresh data and Powell’s speech influence sentiment.
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