Gold (XAUUSD): Gold Surges Past 50-Day MA as Powell Signals Rate Cut Readiness

Gold Surges as Powell Comments Hammer Dollar and Yields

Gold prices surged on Friday as Federal Reserve Chair Jerome Powell opened the door to possible rate cuts, triggering a broad-based selloff in the US Dollar and Treasury yields. Spot gold (XAU/USD) settled at $3371.23, up $32.52 or +0.97%, breaking back above its 50-day simple moving average and eyeing key resistance at $3409.43.

Fed Chair Powell Tilts Dovish at Jackson Hole

In his final appearance at the Jackson Hole symposium, Powell acknowledged rising risks in the labor market, stating that the balance of risks may now justify a shift in the Fed’s policy stance. Though he avoided confirming a cut, markets took his tone as a signal of upcoming easing.

The reaction was swift. CME’s FedWatch tool showed odds of a 25 basis-point September rate cut jumped to 91%, up from 72% earlier in the day. Independent metals trader Tai Wong noted Powell’s comments “opened the express lanes to a September rate cut,” lifting all asset classes, especially gold.

Dollar Index Breaks Key Support After Yield Slide

The U.S. Dollar Index (DXY) sank 0.90% to close at 97.73, breaking below both the 50-day SMA at 98.1 and support at 97.859. Front-end yields fell hard, with the 2-year yield dropping nearly 10 basis points to 3.698%, while the 10-year fell to 4.256%.

Technically, DXY failed to hold above 98.317 and reversed sharply from the week’s high at 98.834. With the index now well below its 200-day average and sellers in control, downside targets at 97.109 and 96.377 are now on the radar.

Gold Reclaims Key Levels as Physical Demand Remains Subdued

Gold’s rally pushed it decisively above near-term resistance at $3353.58 and back above the 50-day SMA at $3346.80. The next upside test lies at the recent highs at $3409.43 and $3439.04. On the downside, support sits at $3310.48, with firmer demand at $3228.38 and $3166.46 if selling resumes.

Physical demand in Asia was mixed. Volatility kept Chinese buyers cautious, while Indian jewellers resumed purchases ahead of festival season. The physical market remains secondary as macro factors dominate price action.

Gold Prices Forecast: Bullish Outlook as Dollar Weakens and Fed Dovishness Grows

Gold remains well-supported as Fed rate cut expectations increase and dollar weakness deepens.

With DXY breaking down technically and Powell signaling growing labor market risks, traders are likely to continue buying dips in gold. A clean break and close above $3409.43 could accelerate bullish momentum toward $3439.40, $3451.53 and the record high at $3500.20.

Unless incoming jobs or inflation data dramatically reverse sentiment, gold bulls have the upper hand heading into the September FOMC meeting.

More Information in our Economic Calendar.