Gold drifted lower in early Friday trade, with sellers regaining control as investors await Federal Reserve Chair Jerome Powell’s highly anticipated speech at the Jackson Hole Symposium. The metal is struggling to sustain Thursday’s modest rebound, weighed down by a resurgent US dollar and fading expectations of a September rate cut.
The greenback is holding firm near two week highs against major peers, supported by a run of stronger than expected US economic data. July existing home sales rose 2.0% to 4.01 million, beating forecasts, while S&P Global’s composite PMI climbed to 55.4 in August the highest in eight months. Both manufacturing and services gauges also exceeded estimates, reinforcing the view that the US economy remains resilient.
That resilience has prompted traders to trim bets on a September cut to 75% from around 85% before the PMI release. The dollar has also drawn safe haven flows amid renewed selling in US equities, as investors reassess the lofty valuations of AI-driven stocks.
Attention now turns squarely to Powell’s address at Jackson Hole. Markets expect him to reaffirm a cautious stance, with some speculation that he could even signal a reversal of the Fed’s 2020-era policies, including flexible inflation targeting and the strong bias toward full employment. His tone will be critical in shaping the near-term trajectory for both the dollar and gold.
Trading Implications:
- A hawkish pushback against aggressive easing bets could extend the dollar’s rally, driving gold back below the $3,300 threshold.
- A dovish surprise, however, may trigger a sharp dollar sell off, allowing bullion to recover toward recent highs.
With Powell’s remarks likely to set the tone for global markets into September, traders should prepare for heightened volatility across USD and gold pairs. This speech could prove to be the decisive pivot point for positioning ahead of the Fed’s next policy meeting.
Disclaimer: This report is for informational purposes only. It does not constitute investment advice or represent the official views of any central bank or regulatory body.