Gold (XAU/USD) rebounded sharply from a two-week low on Monday, gaining support from retreating US Treasury yields and renewed expectations of a Federal Reserve rate cut in September. The safe-haven metal also attracted buying interest as US President Donald Trump was meeting Ukrainian President Volodymyr Zelensky and some of the most important European leaders to talk of a possible peace deal with Russia. But a weak appreciation in the US Dollar and a general risk-on mood in the global markets might cap the upside momentum, with traders keeping a close eye on future FOMC Minutes and Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium for new policy signals.
KEY LOOKOUTS
• The market is more and more expecting a rate reduction in September, with the CME FedWatch Tool indicating at least two reductions by the end of the year.
• Bilateral negotiations and then European discussions of a possible Russia-Ukraine peace agreement are watched by investors for geopolitical signals.
• Falling Treasury yields underpin gold, but a modest USD recovery could limit gains.
• Traders look to Wednesday’s FOMC Minutes and Powell’s Jackson Hole speech for transparency on the Fed’s short-term policy direction.
Gold prices made a sharp rebound from a two-week trough on Monday, underpinned by declining US Treasury yields and increasing hopes of a Federal Reserve rate cut later in September. The yellow metal’s safe-haven demand was additionally fueled by expectations of US President Donald Trump’s meeting with Ukrainian President Volodymyr Zelensky and European leaders to talk about a possible peace agreement with Russia. But a modest recovery for the US Dollar and a broadly positive risk appetite in world markets may cap additional gains for gold, with traders waiting for the next FOMC Minutes and speech from Fed Chair Jerome Powell at the Jackson Hole Symposium for more definitive policy cues.
Gold recovered from a two-week low as US bond yields ease and bets on Fed rate cuts boosted demand for the safe-haven metal. Geopolitical events, such as Trump-Zelensky discussions, and future Fed signals will be main motivators for its next direction.
• Gold (XAU/USD) recovered more than $30 from a two-week low on Monday.
• Falling US Treasury yields and September bets on Fed rate cuts boosted the metal.
• CME FedWatch Tool indicates two or more cuts by end-year probability.
• Trump-Zelensky summit and European leaders’ negotiations on a peace agreement provided geopolitical boost.
• Modest US Dollar strength and risk-on market tone put a lid on additional advance.
• Traders look for policy guidance from FOMC Minutes and Powell’s Jackson Hole speech.
• Technicals indicate resistance around $3,355-$3,374 and support around $3,324-$3,323.
Gold picked up steam at the beginning of the week, tapping strength from declining US Treasury bond yields and increasing optimism that the Federal Reserve will reopen the rate-cutting taps in September. The change in monetary policy expectations has rekindled appetite for the non-yielding precious metal, which is appealing to investors looking for stability. In addition, the planned meeting between US President Donald Trump and Ukrainian President Volodymyr Zelensky, followed by further discussions with European leaders on a possible Russia-Ukraine peace accord, has boosted safe-haven demand for gold in the face of heightened geopolitical interest.
XAU/USD DAILY PRICE CHART
SOURCE: TradingView
Meanwhile, recent US economic data have shaped market sentiment. Although retail sales were growing steadily, inflation expectations crept up, indicating persisting price pressures. Consumer confidence, though, softened appreciably, reflecting caution in households regarding the economic environment. It is against this that investors are keenly observing the publication of FOMC Minutes and Fed Chair Jerome Powell’s address at the Jackson Hole Symposium for direction on the speed of monetary loosening that will determine gold’s near-term demand.
TECHNICAL ANALYSIS
Gold has strongly bounced back from the $3,324–3,323 support level, which coincides with the 61.8% Fibonacci retracement of the July rally. The above 200-period Simple Moving Average (SMA) on the 4-hour chart recovery indicates fresh bullish strength, with the oscillators also shifting into positive territory. A continued advance above the $3,355 level, which is equivalent to the 50% retracement, may set the stage for more gains toward $3,372–3,374 and potentially the $3,400 psychological level. To the negative, near-term support lies in the $3,346 area, with a violation unleashing the $3,300 round number and further losses toward $3,283–3,282.
FORECAST
If gold is able to hold its recovery above important resistance levels, the momentum may stretch to the $3,372–3,374 range based on Fed rate cut hopes and safe-haven buying in a climate of geopolitical uncertainty. Another push may enable the metal to retake the $3,400 level and even test the monthly high around $3,408–3,410 levels, particularly if bond yields continue to decline and the US Dollar loses ground.
Conversely, not breaking above near-term support at $3,346 or a break below $3,324–3,323 support would re-ignite selling pressure. This would expose gold to retesting of the $3,300 psychological barrier, with further losses potentially pushing it down toward $3,283–3,282 and even the end-June swing low around $3,268 should risk appetite firm up and the US Dollar regain momentum.
