Gold (XAUUSD) and Silver Rally After Powell’s Speech as Markets Price In Rate Cuts

Gold (XAUUSD) prices reacted positively to Jerome Powell’s speech at Jackson Hole. Powell’s remarks hinted at possible rate cuts in September. Lower rates reduce the opportunity cost of holding gold. As a result, gold demand tends to rise when the Fed signals a dovish shift. However, Powell did not make a clear commitment, which made markets cautious and kept gold’s gains limited for now.

Moreover, stagflation fears are boosting gold’s appeal. The combination of slowing growth and persistent inflation drives demand for safe-haven assets. Gold tends to perform well in stagflationary environments, preserving value as currencies lose purchasing power. The recent jump in wholesale prices has amplified these concerns. As investors brace for a slower economy with elevated inflation, gold remains a strong hedge.

On the other hand, labour market signals are also crucial for gold’s next move. The chart below shows that initial jobless claims in the US jumped to 235,000 in the second week of August.

However, the unemployment rate remains steady at 4.2%, as shown in the chart below.

A rising unemployment rate in August would confirm a weakening labour market and strengthen the Fed’s case for a rate cut in September.

Gold Technical Analysis

XAUUSD Daily Chart – Price Turn after Powell’s Speech

The daily chart for spot gold shows a strong rebound from the 100-day SMA, forming a bullish price action. The price was turned at the support of the 50-day and 100-day SMAs, signalling a continuation of the upward rally. The immediate resistance lies in the $3,450 to $3,500 region. A breakout above $3,500 would likely trigger a strong surge toward higher levels in the coming weeks.

XAUUSD 4-Hour Chart – Price Rally

The 4-hour chart for spot gold shows that the price is consolidating between the $3,250 and $3,450 region. This consolidation has persisted for the past four months, keeping the price range-bound.

A break above $3,450 is needed to push prices toward the key breakout level at $3,500. These prolonged consolidations are building a constructive price structure, and a breakout above the record level would likely trigger the next strong surge in gold.

Silver Technical Analysis

XAGUSD Daily Chart – Positive Price Development

The daily chart for spot silver (XAGUSD) shows that the price has formed an Adam and Eve pattern below the $35 region. Moreover, after breaking above $35, the price has been forming bullish price action and continues to build positive momentum above the 50-day SMA.

A break above the $40 region would likely trigger a strong surge toward the $42 level. Additionally, the RSI is trending positively above the mid-level, supporting the bullish outlook.

XAGUSD 4-Hour Chart – Positive Price Development

The 4-hour chart for spot silver shows that the price is forming bullish price action above the $37 region. The breakout above $35 cleared a significant resistance level, and the continued momentum above $37 suggests further upside.

Silver has also broken through the $38.60 level following Powell’s Jackson Hole speech. A break above $40 would likely extend the strong momentum and push prices to $42.

US Dollar Index Technical Analysis

US Dollar Daily – Negative Price Action

The daily chart for the US Dollar Index shows that the index has broken below the 50-day SMA and continues its downward trend. The consolidation over the past three months is forming a strong bearish pattern, indicating that the next move for the US dollar is likely to be lower. A break below the 96 level would confirm this direction and could push the US dollar toward the 90 region.

US Dollar 4-Hour Chart – Breakout after Powell’s Speech

The 4-hour chart for the US Dollar Index shows that the index has broken below the support of an ascending broadening wedge pattern, indicating negative price action. The immediate support lies near the 97 level, and a break below this area appears likely. The next key support is at 96.40, which could be tested if the 97 region fails to hold. This breakdown signals that the US Dollar Index is building negative momentum.