Gold price falls as US dollar recovers ahead of US data

• Gold fell 0.70% to $2,504 as the U.S. dollar strengthened and Treasury yields rose following Powell’s dovish policy comments.
• DXY rose 0.60% to 101.15, propelled by a rise in the 10-year Treasury yield to 3.841%, challenging low-yielding assets such as gold.
• The market is anticipating key US data: GDP estimates, initial jobless claims and the PCE core inflation gauge this week.
• Gold sees inflows and demand from China but struggles with a stronger US dollar and rising yields.

Gold prices fell more than 0.70% on Wednesday as the greenback rebounded after Federal Reserve (Fed) Chairman Jerome Powell suggested the US central bank was ready to ease policy as policymakers worried by a weak labor market. XAU/USD is trading at $2,504 after retreating from a daily peak of $2,529.

Wall Street trades in losses ahead of Nvidia’s Q2 2025 earnings report The US dollar hits a three-day high supported by higher US Treasury yields, with the US dollar index (DXY) at 101.15, gaining 0. 60%

Despite that, the gold metal is above $2,500 even as the yield on the 10-year U.S. Treasury note rises two basis points to 3.841%, a headwind for the unprofitable metal.

Sources quoted by Reuters noted: “We are seeing a little bit of pressure coming from a slightly firmer dollar. And at this point, we’re waiting for additional information to drive this market either way based on this inflationary data.”

Meanwhile, bullion prices are expected to rise further after Powell’s speech in Jackson Hole, where he said the time has come to start cutting borrowing costs amid increased confidence that inflation is heading towards the Fed’s 2% target .

He added that the risks of the dual mandate are tilted towards lower inflation and higher employment. The sharp shift suggests that upcoming labor market data will be crucial in assessing the pace and size of future interest rate cuts.

According to the World Gold Council, XAU/USD prices also benefited from a modest increase in net inflows of 8 metric tons ($403 million) last week, led by North American funds. Moreover, China’s net gold imports rose 17 percent in July, marking the first month of gains since March, data showed on Tuesday.

The US economic file is limited on Wednesday, but Thursday and Friday will be busy. On Thursday, the second estimate of Gross Domestic Product (GDP) is expected to show that the economy continues to grow above trend. At the same time, the US Labor Department will release initial jobless claims for the week ending August 24.

On Friday, the Fed’s preferred inflation gauge, the core price index for personal consumption expenditures (PCE), is expected to rise by a tenth, according to consensus.

The December 2024 fed funds rate futures contract in Chicago suggests investors are eyeing 100 basis points of Fed easing this year, up from 97 months ago. That implies traders are expecting a 50bps rate cut at the September meeting, however the odds of a rate cut of that size are 36.5%, according to the CME FedWatch tool.

Daily Market Roundup: Gold retreats as traders prepare for US data

• If US economic data continues to be weak, gold’s bullish trend is likely to persist, fueling speculation of a further rate cut by the Fed.
• Gross Domestic Product (GDP) figures for Q2 in the second estimate are expected to improve from 1.4% to 2.8%.
• Initial jobless claims for the week ending August 24 are expected to be unchanged at 232,000 from the previous reading. Weakness in the labor market could increase the chances of a bigger rate cut by the Fed.
• The core price index for personal consumption expenditures (PCE) is expected to increase from 2.6% to 2.7% per year.
• Next week, the US economic file will present the August Nonfarm Payrolls report, which could be crucial to gauge the size of the Fed’s first interest rate cut at the September meeting.

Technical outlook: Gold’s uptrend intact despite posting losses, targeting $2,500

Gold’s uptrend remains intact, even as the yellow metal hit a daily low below $2,500 at $2,493. The Relative Strength Index (RSI) shows that bullish momentum has faded, but buyers are looming amid the ongoing pullback.

If XAU/USD breaks below $2,500, the first support would be the July 17 peak at $2,483. If breached, the psychological $2,450 mark would appear as the next support, followed by the 50-day Simple Moving Average (SMA) at $2,414.

Conversely, if bullion prices remain above $2,500, the next resistance would be the all-time high of $2,531. Next, Gold could test $2,550 before challenging $2,600.