Gold (XAUUSD) Price Forecast: Gold Waits on Warsh as Dollar Weakness Stalls

Gold Is Stuck Because the Dollar Cannot Decide Who Is Running Policy

Gold dipped to its lowest level since August 21 Thursday and bounced. The dollar sat near 99.17 and did not move. Treasury yields went nowhere. The market is waiting for Kevin Warsh at Jackson Hole Friday before it picks a direction. The uptrend is intact on the swing chart but a new main top has formed at $4,697.11 after a two-day pullback.

At 16:21 GMT, Spot Gold (XAUUSD) was trading at $4,639.29, down $11.95 or 0.26%.

The dollar index sitting near 99.17 and refusing to move is not calm. It is the currency market holding its breath before Warsh speaks.

Treasury and the Fed Are Pulling the Dollar in Opposite Directions

Treasury Secretary Scott Bessent doubled the size of quarterly repurchases of longer-dated bonds. The plan is aimed at easing pressure in the long end after yields reached multiyear highs. The dollar broke to a three-month low last week when the announcement landed. It has recovered part of that move but it is still not trading like a market that knows where policy is headed.

Gold rallied 5% on the back of Bessent’s announcement. The trade was straightforward. Treasury stepping into the long end weakened the dollar and gave buyers a reason to own gold. Tuesday’s high near $4,700 was where the rally ran out of momentum. The metal has been pulling back since, not on a change in the Treasury story, but on the realization that the Fed side of the argument has not gone away.

Kansas City Fed President Jeffrey Schmid said current interest rates are not restrictive. Chicago Fed President Austan Goolsbee raised concerns about inflation as the Jackson Hole conference opened. Those are not officials preparing to accept lower yields as the new normal. They are officials still arguing the case for tighter policy while Treasury is working to loosen conditions at the long end.

Gold is trading the collision between those two positions. The Treasury bid underneath the metal is real. The Fed pushback against it is also real. The dollar sitting flat Thursday says the currency market has not picked a winner yet.

The Data Thursday Did Not Help Gold Buyers

Jobless claims fell for a second straight week and came in below expectations. The labor market is not cracking. Wednesday’s PCE report came in hotter than expected. September hike odds backed off Thursday from where they stood after the inflation number, but the trade is still live.

Gold reached $4,697 this week on the Treasury buyback story. It has been selling off because the economic data is not cooperating with the dovish read buyers need. A weaker labor market and cooler inflation would give the Fed room to stand aside. Claims and PCE both said the opposite. The metal can hold above its recent lows on the Treasury story alone. It cannot push back toward the highs without the data confirming that rates have done enough.

Warsh Speaks Friday With Both Arguments on His Desk

Warsh has said the Fed should speak less and let bond-market price signals carry more weight. That approach runs directly into what Bessent is doing. Treasury buying in the long end changes the signal before the Fed gets to read it. Warsh does not have to announce a rate move to move gold. He walks onto the stage Friday with a weaker dollar, a Treasury program that is actively suppressing long yields, two Fed presidents calling for tighter policy, and inflation still running above target.

Gold is waiting for a read on which side of that picture Warsh puts his weight behind. The dollar is waiting for the same thing. Thursday’s lack of movement in both markets is the hold before the answer.

China’s net gold imports through Hong Kong rose about 11% in July from the prior month. The geopolitical bid from the Iran conflict has not gone away. Neither of those stories drove Thursday’s trade. They sit underneath the market as reasons buyers stay close on every dip while the policy debate plays out above them.

Daily Spot Gold (XAUUSD) Technical Analysis

Spot Gold is edging higher late in the session on Thursday after dipping to its lowest level since August 21. The market is in an uptrend, but a new main top has formed at $4697.11 after a two-day setback. A trade through this level will reaffirm the uptrend. A trade through $4311.04 will change the main trend to down.

On the upside, a breakout over $4697.11 will likely target a long-term 50% level at $4744.34 and a May 12 swing top at $4773.58.

On the downside, the first target is a long-term 61.8% level at $4541.88, followed by the 200-day moving average at $4524.29.

Trader reaction to the 200-day MA is likely to determine whether XAUUSD makes a move to resume the uptrend, or retest $4481.78. Breaking this level will put gold back into bear market territory with $4416.82 another likely downside objective.

What to Watch

Warsh at Jackson Hole Friday is the event. The dollar has not moved because the currency market does not know whether the Fed accepts what Treasury is doing to the long end or pushes back against it. Gold followed the dollar lower from $4,697 and bounced Thursday without clearing anything. The Treasury buyback trade gave gold a 5% rally last week. The inflation data and Fed officials talking tough have been taking it back this week. Friday settles which side of that argument gets to lead heading into September.

The uptrend is intact on the swing chart with the main top at $4,697.11 as the level that reaffirms it. The 200-day moving average at $4,524.29 is where value buyers step in on a deeper correction. Gold is between those two levels waiting for the same answer the dollar is waiting for.

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