Gold struggles as strong US Dollar and yields weigh ahead of Powell's Jackson Hole speech

Gold (XAU/USD) is trading on the back foot for a second straight day on Friday, weighed down by a strong US Dollar (USD) and firm Treasury yields. At the time of writing, the precious metal is hovering near $3,325, down 0.40% on the day. Despite the decline, bullion remains locked within the familiar $3,320-$3,350 range that has shaped this week’s price action.

All eyes now turn to Federal Reserve (Fed) Chair Jerome Powell’s speech at the Jackson Hole Symposium, scheduled for 14:00 GMT, which carries outsized importance this year. It will be his final Jackson Hole address before his term expires in May 2026. Powell’s remarks come at a delicate juncture, with the Fed facing intensifying political pressure by US President Donald Trump and an economy sending mixed signals, with resilient consumer spending on one hand, but softening labor market data and sticky inflation on the other.

Analysts expect Powell to avoid signaling an interest rate cut in September, instead reinforcing the Fed’s data-dependent stance and stressing that future action hinges on upcoming labor and inflation figures. According to the CME FedWatch Tool, markets now price near a 70% chance of a 25 basis point (bps) cut in September, down from near-certainty a week ago as resilient US economic data tempered expectations for aggressive easing.

Investors will dissect Powell's comments for signs of a policy shift, especially any move away from the Fed’s 2020 framework prioritizing maximum employment toward a more balanced stance between inflation control and growth. Until then, Gold is likely to remain range-bound, with geopolitical uncertainty around Russia-Ukraine talks keeping safe-haven demand alive even as the firm US Dollar and yields cap the upside.

Market movers: Hawkish lean in Fed rhetoric keeps Dollar and yields bid

• The US Dollar Index (DXY), which measures the Greenback against a basket of six major currencies, extends its weekly gain to a two-week high, trading around 98.76. The move is supported by declining expectations of Fed rate cuts and hawkish comments from Fed officials.
• Jeffrey Schmid, Kansas City Fed President, struck a cautious tone on Wednesday, telling CNBC that inflation remains “closer to 3% than 2%” and that policymakers still have “work to do” before easing policy. He emphasized that the Fed will closely monitor the upcoming August and September inflation prints, noting that monetary policy is “modestly restrictive and appropriate” for now. Schmid added that markets and spreads remain in good shape but stressed the need for more definitive data before considering any policy shift, making clear that he is “not in a hurry” to cut interest rates.
• Atlanta Fed President Raphael Bostic echoed the cautious stance, reiterating his outlook for just one rate cut this year while warning that the employment trajectory is “potentially troubling.” Bostic added that policy should move consistently, projecting that rates could return closer to neutral only by 2026.
• Fed Governor Hammack also leaned hawkish, stating that inflation is still too high, its trend remains unfavorable, and he does not see a case for a September rate cut based on current data, while underscoring the importance of maintaining modestly restrictive policy.
• Boston Fed President Susan Collins struck a more balanced tone compared to her colleagues, signaling openness to a rate cut as soon as next month, given the dual risks of weaker employment and higher tariffs. She cautioned that elevated tariffs could erode consumer purchasing power and dampen spending, posing downside risks to growth.
• US Treasury Yields are edging higher for a second day, with the benchmark 10-year note steady near 4.33% and the 30-year bond around 4.95%. The 10-year TIPS yield hovers at 1.95%. This sustained elevation in yields reflects markets recalibrating toward a more cautious Fed, keeping pressure on bullion ahead of Powell’s remarks.
• On the geopolitical front, diplomatic uncertainty persists as prospects for Russia-Ukraine peace talks remain fragile. According to a Bloomberg report, US President Donald Trump has decided to step back from direct mediation, telling advisers that any US-hosted trilateral summit would only follow a bilateral meeting between Presidents Putin and Zelenskyy. Meanwhile, Moscow has raised sweeping demands, including Ukraine ceding the Donbas region, renouncing NATO ambitions, adopting neutrality, and banning Western troops. The lack of tangible progress underscores elevated geopolitical risk, providing a floor for safe-haven demand in Gold.

Technical analysis: XAU/USD holds within a tight range, downside risks loom below $3,330

Gold (XAU/USD) is trading near $3,330, testing a pivotal horizontal support area that aligns with the upper boundary of a falling wedge pattern on the 4-hour chart. This zone has become the immediate line of defense for buyers.

The Relative Strength Index (RSI) sits around 44, below the neutral 50 mark, indicating fading momentum and leaving the near-term bias tilted slightly bearish. A dip toward 40 would strengthen downside pressure, while a rebound above 55 would hint at renewed buying interest.

The Moving Average Convergence Divergence (MACD) line remain below the zero axis and beneath the signal line with a mildly negative histogram, reflecting a lack of bullish conviction and signaling that sellers still have the upper hand for now.

A decisive move below $3,330 would expose the next supports at $3,310 and $3,300. On the flip side, a recovery above $3,350, reinforced by the 100-period SMA, would open the door for a retest of $3,370, with scope toward $3,400 if momentum builds.

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