Gold Turns Lower On Powell Speech

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Gold Turns Lower On Powell Speech

Gold (Xau/Usd) Turns Lower On Powell'S Speech

weakness was seen in the Gold (XAU/USD) prices on Tuesday ahead of the Fed Powell's speech. For now, gold (XAU/USD) is stuck in a tight trading range with a bearish bias, and the US interest rate is expected to stay higher.

That's why it is safe to say that gold (XAU/USD) is likely to trade for nearly $2300 in the short term, as there's still no news of a rate cut from the US Federal Reserve.

Spot Gold Down By 0.2%, August Futures Also Down By 0.1%

For now, spot gold is down by 0.2% and is trading near the $2326 per ounce. Similarly, the Gold futures (August) are also down by $2335, with a 0.1% decline for the day.

The biggest catalyst for the gold markets is most definitely the speech of the US Fed, Powell, and other Fed officials. Any hints about the upcoming changes in the policy rate will decide the next course of action in the Gold prices.

Jerome Powell will be speaking at the ECB conference later today, but experts believe that he will not talk anything new about the rate policy.

Once Powell's speech is over, the next key catalyst for the Gold price is the Fed's meeting minutes for June. For the most part, the Fed officials are expected to downplay the expectations of rate cuts in the short term.

Next up is the NFP report due on Friday, which will provide an insightful look at the US labor market. If we look at the past few months, the NFP has consistently remained strong, and a similar reading is expected for the upcoming NFP release.

Although the odds of a Sep rate cut have increased, it offered little support to the Gold. As of right now, there's a 60% chance that a 25 bps rate cut will be made by the Federal Reserve, according to the CME FedWatch tool.

In general, an environment of high rates is not that good for Gold, Silver, and other precious metals. The reason is simple - Investing in these assets carries a high opportunity cost as opposed to fiat currencies like USD, EUR, & others.

However, a new trend has been seen in the last few years as a lot of central banks from Asia are increasing their holdings of Gold bullion. So, a strong demand from the central banks can also push the gold prices higher.

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