Gold News: Gold Prices Dip as Rate Cut Bets Fade Ahead of Powell’s Jackson Hole Speech

Can Powell’s Jackson Hole Speech Trigger a Breakout in Gold Prices?

Gold prices edged lower Thursday as a stronger U.S. dollar and firming Treasury yields weighed on the metal, with traders squarely focused on the Federal Reserve’s Jackson Hole symposium. Spot gold failed to gain traction above the 50-day moving average at $3348.10 and the key retracement level at $3353.58, prompting an early retreat.

The move lower has brought yesterday’s low at $3311.56 and the long-term pivot at $3310.48 into play. A decisive break below $3310.48 could open the door to further downside pressure. On the upside, bulls will need a clean break above $3353.58 to target the swing top at $3374.81, with stronger resistance sitting at $3409.43. While the broader trend remains upward, recent price action suggests rallies are losing steam.

At 12:27 GMT, XAU/USD is trading $3337.48, down $11.00 or -0.33%.

Dollar Strength and Bond Yields Apply Pressure on Gold

The U.S. dollar index rose 0.1% to 98.337, supported by higher bond yields and reduced expectations for aggressive Fed easing. The benchmark 10-year Treasury yield climbed to 4.312%, while the 2-year yield ticked up to 3.762%. This modest uptick in yields and a firmer dollar continued to cap gold’s upside, making it more expensive for foreign buyers and reducing appeal versus yield-bearing assets.

Fawad Razaqzada of City Index noted gold remains trapped in a tight range, with bulls and bears both frustrated by the lack of direction. “Global bond yields have ticked higher, and the dollar has firmed up… The metal is continuing to consolidate,” he said, adding that a breakout above $3400 remains uncertain without a dovish signal from Powell.

Fed Policy Outlook in Focus as Traders Price in September Cut

Markets are pricing in a nearly 80% chance of a rate cut at the Fed’s next meeting, according to CME’s FedWatch tool. However, recent FOMC minutes reveal hesitancy among policymakers, with inflation and labor market concerns prompting a more cautious tone. Dissent from Fed governors Waller and Bowman—both advocating for a cut—was notable but isolated.

Fed Chair Jerome Powell’s speech on Friday at Jackson Hole is expected to clarify the Fed’s stance. According to Societe Generale’s Kenneth Broux, the bigger risk lies in Powell pushing back against rate-cut expectations. “The risks are asymmetric. If Powell doesn’t lean dovish, we could see a sell-off in Treasuries and stronger dollar,” he said.

Gold Prices Forecast: Bias Tilted Bearish Unless Fed Delivers Dovish Surprise

With gold unable to sustain gains above key technical levels and the dollar remaining firm, the near-term bias leans bearish.

Unless Powell signals a clear dovish shift, gold may retest support at $3310.48. A failure to hold that level could accelerate selling pressure.

Conversely, a breakout above $3353.58 could trigger short covering toward $3374.81, but upside will likely remain limited without confirmation of a September rate cut.

For now, the path of least resistance is lower.

More Information in our Economic Calendar.