Gold prices are holding firm around $3,370 an ounce at the start of the week, consolidating gains after Federal Reserve Chair Jerome Powell’s dovish remarks at Jackson Hole on Friday. While the US dollar has recovered modestly, traders remain focused on upcoming economic data that could shape the Fed’s next move.
Fed Outlook Supports Bullion
With the Fed signalling greater flexibility, markets are now pricing in a 90% chance of a September rate cut, according to the Prime Market Terminal probability tool. ING analysts note that Powell’s stance has strengthened expectations of a near-term policy shift, adding:
“With US rate cut bets intensifying after Powell’s speech, gold could be poised for another fresh record high.”
This week’s focus will be on key releases, including Durable Goods Orders, US GDP, Initial Jobless Claims, and the Core PCE Price Index – the Fed’s preferred inflation gauge. A slowdown in growth or softer inflation would further strengthen the case for cuts.
Geopolitics and Trade Developments
While monetary policy dominates the gold narrative, geopolitics remains a factor. US President Donald Trump and Russian President Vladimir Putin recently discussed denuclearisation, though tensions over Ukraine persist. A genuine de-escalation of the conflict could dampen bullion demand, which typically benefits from geopolitical risk.
Separately, CNBC reported that tariffs on furniture imports are expected as part of a national security investigation into lumber – another development that could weigh on broader market sentiment.
Market Movers: Dollar and Yields Edge Higher
The US 10-year Treasury yield climbed 1.5 basis points to 4.27%, while real yields also edged higher to 1.86%.
The US Dollar Index (DXY) gained 0.52%, reaching 98.24.
US New Home Sales fell 0.6% in July, dropping from 0.656m to 0.652m.
Although the dollar and yields firmed slightly, Powell’s comments on the “shifting balance of risks” have reinforced expectations that policy easing is approaching.
Technical Outlook: Rangebound but Bullish Bias
Gold continues to trade within a $3,350–$3,400 consolidation range. The Relative Strength Index (RSI) has flattened after a bullish turn, signalling reduced volatility.
Immediate resistance: $3,400
Next targets: $3,452 (June 16 high) and $3,500 (record high)
Key support: $3,350, followed by $3,312 at the 100-day SMA
A break above $3,400 could open the door to a fresh rally, while a slip below $3,348 (20/50-day SMA) would suggest short-term weakness.
Outlook
With Fed rate cut bets intensifying and uncertainty still elevated, gold remains well supported despite profit-taking. Investors will look to this week’s GDP and Core PCE data for confirmation of the Fed’s next move. Until then, the metal is likely to remain rangebound but biased higher, with bulls eyeing a decisive break above $3,400.
