- Gold failed to reclaim $2,000 and closed week in red.
- Broad USD strength didn't allow XAU/USD to regather bullish momentum.
- Focus shifts to FOMC Chairman Powell's speech on August 27th.
After rebounding above $2,000 at the start of the week, the troy ounce of the precious metal fell sharply on Wednesday and lost more than 3.5%. Although the XAU/USD pair stayed relatively quiet in the second half of the week, it struggled to recover its losses and closed the week in the negative territory at $1,940.
The broad-based USD strength following the FOMC's July Meeting Minutes caused gold to remain on the back foot. The US Dollar Index, which tracks the USD's performance against a basket of six major currencies, snapped its eight-week losing streak and finished the week at 93.20.
Next week, FOMC Chairman Jerome Powell is scheduled to deliver his remarks on the monetary policy framework review and this is likely to be the next significant catalyst for gold prices.
Previewing this event, "gold will likely resume the uptrend and revisit the record high of $2,075 if Powell signals greater tolerance for above-target inflation, fueling a deeper drop in real or inflation-adjusted bond yields and fresh sell-off in the greenback," said FXStreet analyst Omkar Godbole.
"However, if Powell does not provide clear guidance, the dollar’s oversold bounce will likely gather steam. In that case, gold may find acceptance below the all-important five-month-long bull market trendline," the analyst further added. "At press time, that trendline support is located near $1,890, under which the focus would shift to the Aug. 12 low of $1,863."
Additional levels to consider
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