Gold price up more than 1% on Powell’s convenient guidance

• Gold prices rise more than 1% after Fed Chairman Powell hints at future rate cuts, expressing confidence in inflation approaching the 2% target.
• The US dollar index ( DXY ) is down 0.82% at 100.68 as Powell’s remarks prompt traders to bet on a 50bps rate cut in September.
• U.S. 10-year Treasury yields fell five basis points to 3.80 percent, supporting bullion gains, as the market looked to August’s nonfarm payrolls report for further guidance.

Gold rose more than 1% on Friday as U.S. Treasuries and Treasury yields fell following dovish remarks from Federal Reserve Chairman Jerome Powell, who signaled he was confident inflation was nearing its 2 % and that rates should be reduced. XAU/USD is trading at $2510 after rebounding from daily lows of $2484.

Bullion prices rose sharply after Powell said: “The time has come for policy to adjust. “He acknowledged that inflation is on the way to 2% and expressed that the Fed was headed for the maximum employment mandate.

After these remarks, Gold recovered the $2,500 figure and the Greenback extended its losses. The U.S. dollar index ( DXY ), which measures the greenback’s performance against a basket of six currencies, fell 0.82 percent to trade at 100.68.

U.S. Treasury yields fell immediately, with the benchmark U.S. 10-year note down five basis points to 3.80 percent. Traders increased their bets that the Fed will cut rates by 50 bps at its September meeting.

The CME FedWatch tool shows market participants have fully priced in a 25bps cut, while the odds for a bigger size are 36.5%, up from 24% a day ago.

Now, as the Fed turns to the jobs market, the August nonfarm payrolls report would be the final piece of the puzzle to determine the size of the cut.

Daily market reasons: Gold price rises ahead of next week’s US inflation report

• If the US economic data continues to be weak, the bullish trend in the price of gold will remain, which would increase speculation about a big rate cut.
• After Powell’s speech, other Fed officials made notable comments. Philadelphia Fed President Patrick Harker said the Fed must methodically cut rates. Chicago Fed President Austan Goolsbee added that monetary policy is currently at its most restrictive level and the Fed’s focus is now on meeting its hiring mandate.
• Next week, the US economic file will feature durable goods orders, the Conference Board (CB) consumer confidence index, initial jobless claims data for the week ending August 24 and the Fed’s favorite gauge of inflation, the price principal of personal consumption expenditures (PCE). Index.
• In addition, Fed speakers led by Christopher Waller and Atlanta Fed President Raphael Bostic will cross paths to set the stage ahead of the September meeting.

Technical outlook: Gold’s uptrend intact as buyers eye $2,550

Gold’s uptrend remains intact and could extend if buyers lift prices above the all-time high (ATH) of $2,531. A breach of the latter will expose the $2,550 mark, followed by the $2,600 mark.

On the other hand, if Gold reaches a daily close below $2,500, a retest of the previous all-time high (ATH) of $2,483 is on the cards. If broken, gold’s next support would be the May 20 peak at $2,450, followed by the 50-day Simple Moving Average (SMA) at $2,402.