Gold Under Pressure Ahead of Jackson Hole
Gold fell around 0.6% to around $3,325/oz during Thursday's European session, after selling pressure emerged every time the price approached $3,350. The tone of the July FOMC minutes, which emphasized the need for clarity on the impact of tariffs on inflation, kept the market restrained and kept the US dollar strong—a combination that was less than favorable for gold.
However, there are differing views within the Fed. Michelle Bowman and Christopher Waller believe a 25 bps cut is preferable because they prioritize cooling the labor market. Officially, the Fed held interest rates at 4.25%-4.50% in July, while CME FedWatch still shows an 81.6% chance of a 25 bps cut to 4.00%-4.25% in September.
The next major catalyst is Jerome Powell's speech at the Jackson Hole Symposium on Friday. A hawkish tone (suppress inflation, be patient with cuts) could potentially curb gold's rally and strengthen the dollar. Conversely, dovish signals could trigger short-covering and drive a rapid recovery in gold. Technically, $3,350 remains a nearby resistance zone, while $3,300-$3,280 is a closely watched support area.
Geopolitically, the market is also monitoring news of Russia-Ukraine peace efforts, including reports of a possible trilateral meeting in Budapest. The prospect of a ceasefire tends to reduce the commodity's risk premium, but in the very near term, gold's direction will likely remain determined by Powell and the US dollar's response. (alg)
Source: Newsmaker.id
