Gold sticks to modest intraday gains amid bearish USD, focus remains on Powell’s speech

• Gold price attracts some dip-buying on Friday, albeit lacks follow-through and remains below $2,500. 
• Dovish Fed expectations prompt some USD selling, which, along with geopolitical risks, lend support.
• The upside seems capped as traders keenly await Fed Chair Jerome Powell’s speech later this Friday.

Gold price (XAU/USD) regains positive traction during the Asia session on Friday and recovers further from the weekly trough touched the previous day. The attempted US Dollar (USD) recovery from the YTD low set on Wednesday runs out of steam amid growing acceptance that the Federal Reserve (Fed) will begin its policy easing cycle in September. This, in turn, is seen as a key factor acting as a tailwind for the non-yielding yellow metal. 

Apart from this, persistent geopolitical tensions stemming from the ongoing conflicts in the Middle East lend additional support to the safe-haven Gold price. The XAU/USD, however, remains below the $2,500 psychological mark as traders await Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium for cues about the rate-cut path. This will drive the USD demand in the near term and provide a fresh directional impetus to the precious metal. 

Daily Digest Market Movers: Gold price benefits from modest USD weakness as traders look to Powell’s speech

• The US Dollar staged a goodish bounce from the 2024 low touched the previous day amid rebounding US Treasury bond yields and drove flows away from the Gold price on Thursday. 
• The attempted USD recovery lacks follow-through in the wake of bets for an imminent start of the Federal Reserve’s rate-cutting cycle in September, which helps limit losses for the XAU/USD. 
• On the economic data front, the US Department of Labor (DoL) reported that Initial Jobless Claims rose to a seasonally adjusted 232,000 in the week ending August 17, up from the 228K previous.
• This follows the annual benchmark review of employment data released on Wednesday, which showed that US employers added 818,000 fewer jobs than reported during the year through March. 
• Moreover, the minutes of the July 30-31 FOMC meeting revealed that an increasing number of policymakers backed the case for a rate cut next month amid progress in bringing down inflation. 
• The S&P Global flash PMI indicated that business activity in the US manufacturing sector shrank at the fastest pace this year, while the gauge for the services sector unexpectedly ticked higher. 
• The composite PMI showed that the business activity in the US private sector continued to expand at a healthy pace and a fall in selling price inflation to a level close to the pre-pandemic average.
• Kansas City Fed President Jeffrey Schmid said that there is still work to do on sustainably getting inflation back to 2% and that he needs to see more data before supporting the decision to reduce rates.
• Philadelphia Fed President Patrick Harker said that jobs market revisions weren’t a surprise and that he was on board with a September interest rate cut as long as the data performs as expected.
• Separately, Boston Fed President Susan Collins said that it will soon be appropriate to begin cutting rates as data on inflation are consistent with more confidence inflation getting back to 2%.
• The market attention now shifts to Fed Chair Jerome Powell’s speech, which will be scrutinized for cues about the interest rate trajectory and provide a fresh directional impetus to the yellow metal.

Technical Analysis: Gold price seems poised to climb further, $2,470 resistance breakpoint holds the key for bulls

From a technical perspective, the overnight downfall stalled near the $2,370 horizontal resistance breakpoint, now turned support, which should now act as a key pivotal point. A convincing break below might prompt some technical selling and drag the Gold price towards the next relevant support near the $2,345-2,343 region. The corrective decline could extend further towards the 50-day Simple Moving Average (SMA), currently pegged just above the $2,400 round figure.

On the flip side, momentum back above the $2,500 mark now seems to confront some resistance near the $2,513-2,514 area. This is followed by the record high, around the $2,531-2,532 region, which if cleared will be seen as a fresh trigger for bullish traders and set the stage for an extension of the Gold price’s recent well-established uptrend.