Gold prices have seen slight drawdowns as the market awaits Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium. Over the past week, the CME’s FedWatch tool has seen a gradual decline in the likelihood of a September interest rate cut. What was once an almost certain expectation has now dwindled to a 75% probability, which has become a significant headwind for gold. While the chance of an immediate rate cut announcement at the event remains unlikely, traders are expected to closely scrutinize Powell’s words, tone, and even body language for any hints regarding future policy decisions.
Key Takeaways:
- Rate Cut Expectations Dwindling: The possibility of a rate cut in September has decreased significantly, as only two Fed members supported the idea in the recent July meeting minutes. This shift in sentiment has weighed on gold prices, with recent trading sessions showing a decline in gold’s value.
- Gold’s Resilience: Despite the recent pullback, gold remains near historical highs, having only lost 3.90% since its peak in April. Over the past 90 days, gold has endured multiple bearish forces but continues to hold its ground, showcasing its inherent strength.
- Support at $3,300: As long as the $3,300 level remains intact as support, gold is expected to remain on its bullish trajectory. Even if Powell’s speech causes some short-term volatility, gold’s overall outlook is likely to stay strong.
Price Action Ahead:
As of the latest session, gold futures have fallen by over $100, trading at $3,384.50. Despite this, the precious metal has shown remarkable resilience, particularly since breaching $3,300 for the first time in history. While the upcoming speech could introduce some temporary market turbulence, the strong fundamentals supporting gold’s price will likely continue to outweigh the effects of Powell’s commentary.
Conclusion:
Gold’s outlook remains bullish, even amidst the minor pullbacks in the short term. As long as the $3,300 support level holds, gold is poised for continued strength. Investors will closely monitor Powell’s speech, but the long-term bullish trend appears intact for the yellow metal.
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