Gold under pressure before Powell's speech at Jackson Hole

Gold prices fell in European markets on Thursday, extending losses for the second consecutive session and approaching a three-week low, pressured by the stronger US dollar against a basket of global currencies after the release of strong US economic data.

The data reduced the likelihood of a Federal Reserve interest rate cut in September, and in order to re-price these expectations, markets are awaiting a speech from Fed Chair Jerome Powell later today at the annual Jackson Hole Economic Symposium.

Price Overview

• Gold prices today: Spot gold fell by 0.4% to $3,325.46, down from an opening level of $3,338.83, after recording a session high of $3,340.70.

• At Wednesday’s settlement, gold lost 0.3%, resuming losses after a one-day pause, pressured by the rising dollar and US Treasury yields.

US Dollar

The dollar index rose by 0.2% on Friday, extending gains for a second straight session to the highest level in nearly two weeks at 98.83, reflecting continued strength of the US currency against a basket of major and minor peers.

This advance was driven by renewed demand for the US dollar as the best available investment in FX markets, especially following strong US sectoral data for August, confirming that the world’s largest economy continues to grow in Q3 at a better-than-expected pace, despite concerns over President Donald Trump’s aggressive trade policies.

US Interest Rates

• According to CME’s FedWatch tool: market pricing for a 25 basis point rate cut at the September FOMC meeting fell from 81% to 75%, while expectations for no change rose from 19% to 25%.

• Market pricing for a 25 bp cut in October also declined from 91% to 85%, with no-change expectations up from 9% to 15%.

Jerome Powell

Powell’s speech at Jackson Hole is scheduled for 15:00 GMT on Friday. Markets will watch closely for signals on the Fed’s policy path and the outlook for US interest rates.

Gold Outlook

• Tim Waterer, chief market analyst at KCM Trade, said: “With peace prospects between Russia and Ukraine still on the table and renewed buying of the US dollar, gold faces headwinds.”

• He added: “If Powell’s comments at Jackson Hole are interpreted as dovish, the dollar could weaken, allowing gold prices to rise again.”

SPDR Holdings

SPDR Gold Trust, the world’s largest gold-backed ETF, reported a 1.44 metric ton outflow on Thursday — its third consecutive daily decline — bringing total holdings down to 956.77 metric tons, the lowest since August 6.