The US Dollar has shown signs of life following recent year-to-date lows, with markets’ attention focused on Powell’s speech at the Jackson Hole Symposium. XAU/USD is facing initial resistance at its record top past $2,530, as it faces renewed selling pressure and dips below the $2,500 mark per ounce troy.
The corrective decline in the precious metal comes as the Greenback rebounds, following the US Dollar Index (DXY) breaking below the key 101.00 support for the first time since December 2023. This rebound is fueled by a bounce in US yields after the dovish tone from the FOMC Minutes released on Wednesday, ahead of Powell’s speech on Friday.
Powell’s speech may provide further insights into the potential interest rate cut next month, with a 75% chance of a 25 bps rate reduction according to CME Group’s FedWatch Tool. A larger cut, such as 50 bps, could put pressure on the Greenback and push Gold to test recent highs. However, the US Dollar will continue to be closely watched, potentially limiting any decline in bullion prices.
XAU/USD Short-Term Technical Outlook
On the daily chart, XAU/USD is above all moving averages, with a bullish 55 Simple Moving Average (SMA) around $2,390. Technical indicators show a stable trend for now, with support at the 100-SMA at $2,452 and resistance at $2,519 and $2,531.
In the short term, XAU/USD faces a corrective decline with support levels at $2,432 and $2,428. A breakdown could lead to a deeper retracement to $2,379. Resistance levels are at $2,531 and $2,535.
Overall, the US Dollar’s rebound and Powell’s speech at Jackson Hole will continue to drive market sentiment and impact Gold prices. Traders should monitor key levels and watch for any indications of further rate cuts, which could affect both the Greenback and Gold in the coming weeks.