Gold Pressured by Fed's Hawkish Tone
Gold prices (XAU/USD) moved in the red during the early European session. Gold traded around $3,340. The strengthening of the US dollar emerged because the market assessed the likelihood of the Fed's interest rate cut would be less aggressive. Higher yields make gold—which does not pay a coupon—less attractive.
However, gold's weakness did not continue. Market participants tended to hold back ahead of a series of US economic data. This "wait-and-see" attitude limited further selling, especially as cautious sentiment persisted in global markets.
From a policy perspective, the Fed's hawkish tone (promoting higher/tighter interest rates) supported the US dollar's strengthening. However, dollar bulls were not entirely convinced. They were awaiting clearer clues regarding the path of interest rate cuts to establish a firmer direction.
The next focus will be on the release of US macro data and Fed Chairman Jerome Powell's speech at the Jackson Hole symposium. Both have the potential to trigger new directions: confirmation of a tighter tone could maintain pressure on gold, while a more dovish (loose) signal could provide room for recovery.
Key Points:
Gold weakened as the US dollar strengthened as expectations for aggressive interest rate cuts waned.
Selling pressure on gold was limited as the market remained cautious and awaited new catalysts.
The Fed's more hawkish tone put pressure on non-yielding assets like gold.
The next direction awaits US economic data and Powell's speech at Jackson Hole.
Policy signals: hawkish = leaning towards raising/holding interest rates high; dovish = leaning towards lowering/loosening. (ayu)
Source: Newsmaker.id
