Gold News: Powell’s Press Conference Could Define Gold Price Future Path

Weekly Recap: Trade Progress Undermines Gold’s Safe-Haven Appeal

Gold closed the week at $3,337.07, down $13.02 or -0.39%, as breakthrough trade negotiations and dollar strength undermined the precious metal’s defensive positioning. The successful U.S.-Japan agreement reducing tariffs on autos and goods, followed by the European Commission’s confidence in reaching a U.S.-EU deal before the August 1 deadline, dramatically reduced geopolitical risk premiums that had supported gold earlier in the month.

The dollar’s recovery from multi-week lows proved decisive, with encouraging labor market data reinforcing Fed resilience despite mounting political pressure. President Trump’s surprise Fed visit and renewed demands for deep rate cuts highlighted escalating tensions with Chair Jerome Powell, though Treasury Secretary Bessent’s reassurances that Powell won’t be forced out helped stabilize sentiment.

Fed Meeting: Political Theater Meets Economic Reality

Wednesday’s Fed decision presents gold’s most critical catalyst, with markets pricing a 97.4% chance of rates staying at 4.25%-4.50%. While the FOMC statement may lack fireworks, Powell’s press conference could prove explosive given Trump’s increasingly combative stance and internal Fed divisions, with Governors Waller and Bowman advocating for immediate easing.

BofA economists expect Powell to emphasize patience and data dependence, likely noting that unemployment remains range-bound despite slowing private sector job growth.

Crucially, Powell may highlight tariff pass-through effects in June’s 2.7% CPI reading, providing cover against political pressure for aggressive cuts. Any dovish surprises could trigger sharp gold rallies, but the base case suggests continued hawkish resistance that would pressure bullion further.

GDP Mirage Could Strengthen Fed’s Hawkish Resolve

Second-quarter GDP expectations of 2.3% growth, rebounding from Q1’s -0.5% contraction, present a double-edged sword for gold. While BofA economists warn this strength reflects import reversals from pre-tariff frontloading rather than genuine economic vigor, the headline number could reinforce Fed confidence in maintaining restrictive policy.

David Payne from Kiplinger suggests averaging Q1 and Q2 figures provides a more realistic growth picture, but markets often react to headline numbers first. A strong GDP print could temporarily boost dollar strength and reduce recession fears that typically support gold, though the underlying weakness may eventually prove more significant for Fed policy.

Jobs Report: The Fed’s Key Decision Driver

July’s employment data, with BofA forecasting just 60,000 new jobs versus June’s stronger-than-expected reading, represents gold’s most important fundamental catalyst. Powell has explicitly stated that meaningful labor market weakening could accelerate rate cut considerations, making this report potentially decisive for monetary policy.

Signs of labor market softening are already emerging, including declining hours worked, decelerating wage growth, and modest 74,000 private sector job gains in June. High continuing claims and unfavorable seasonals could further weigh on July’s numbers, though immigration policy impacts remain premature.

Outlook: Weak Jobs Could Reverse Gold’s Fortunes

Gold faces a critical inflection point where disappointing employment data could override trade optimism and GDP strength.

A July jobs miss below 60,000, combined with any dovish Fed signals, could quickly reverse the current bearish sentiment and reignite gold’s push toward record highs above $3,500.

However, strong economic data and continued Fed hawkishness would likely extend gold’s weakness, with political pressure on Powell potentially creating additional volatility regardless of economic fundamentals.

Technically, the key level to watch this week is the short-term pivot at $3310.48. Holding above it will give the market a chance to challenge current tops at $3451.53 and $3500.20. If it fails to hold, momentum will shift lower with $3244.41 the next target, followed by $3166.46.

More Information in our Economic Calendar.