Gold (XAU/USD) extended its decline for the second straight day on Friday, pressured by a stronger US Dollar (USD) and reduced Federal Reserve (Fed) rate cut bets. The yellow metal, often viewed as a safe-haven asset, has failed to attract fresh buying interest despite a generally cautious market mood. 

Instead, investors appear reluctant to make aggressive moves ahead of Fed Chair Jerome Powell’s speech at the highly anticipated Jackson Hole symposium, which could set the tone for monetary policy expectations in the months ahead. Broker Hana Jelic from ProDivia Group provides a comprehensive breakdown of this topic in this article.

Market Sentiment and USD Dynamics

The US Dollar Index (DXY) recently surged to a two-week high, supported by firming expectations that the Fed will maintain a restrictive stance for longer. While the USD paused for a breather on Friday, its weekly performance remains impressive, preserving gains at the highest levels since early August. 

The resilient greenback has limited Gold’s upside potential, with the non-yielding metal struggling to compete against rising real yields and safe-haven flows gravitating toward the USD.

At the same time, traders are exercising caution. The market’s focus is firmly on Powell’s remarks, which will be closely scrutinized for forward guidance regarding the timing and scale of the Fed’s rate-cutting cycle. 

Given Gold’s inverse relationship with the USD and Treasury yields, any hawkish tilt could deepen XAU/USD’s downside pressure, while dovish signals may trigger a short-covering rally.

Data Reinforces Market Positioning

The CME FedWatch Tool shows traders currently pricing in a 75% probability of a September rate cut, with markets expecting at least two 25 basis point cuts by year-end. Thursday’s US Jobless Claims data further supported these bets, as claims rose by the most in nearly three months while continuing claims reached a four-year high.

Still, the emphasis remains on Powell’s Jackson Hole address. His guidance on the balance between inflation risks and growth concerns could either validate current market pricing or trigger sharp repricing in both the USD and Gold.

Technical Analysis: Gold Faces Key Support Levels

From a technical perspective, Gold prices remain under pressure but continue to hold above key downside markers.

• Immediate support lies at the overnight swing low of $3,325, followed closely by the 100-day Simple Moving Average (SMA) around the $3,316–3,315 zone.
• A decisive break below this level could expose the $3,311 area, representing a three-week low touched earlier this week.
• Sustained weakness beneath $3,311 would likely act as a bearish trigger, accelerating the decline toward the $3,300 threshold and potentially extending losses toward $3,270–3,265, a strong horizontal support band. This zone also aligns with the lower boundary of a three-month trading range, and a breach could suggest that Gold has topped out, paving the way for a deeper corrective move.

On the upside, resistance is firm:

• The $3,348–3,350 zone marks an immediate barrier.
• A break above this region could spark a short-covering rally, lifting XAU/USD toward $3,375.
• Further momentum could extend gains to the psychological $3,400 level, with additional upside capped by the $3,434–3,435 supply zone, which coincides with the upper boundary of the prevailing trading range.

Technical indicators on the daily chart lean slightly bearish, but the presence of critical support levels suggests the market awaits a fresh catalyst before confirming the next directional move.

Outlook Ahead of Powell’s Speech

The near-term fate of Gold hinges almost entirely on Powell’s Jackson Hole speech. A reaffirmation of inflation concerns and reluctance to cut too quickly could strengthen the USD further, dragging Gold toward the $3,300 mark. 

Conversely, if Powell signals stronger confidence in disinflation trends or prioritizes support for slowing growth, markets could accelerate rate cut bets, weakening the USD and offering Gold a relief rally.

Broader themes such as geopolitical risks, equity market volatility, and Treasury yield movements will also continue influencing Gold’s trajectory. However, the Jackson Hole event remains the dominant driver in the immediate term.

Conclusion

Gold remains under selling pressure, struggling to hold ground as reduced Fed rate cut bets and a resilient US Dollar weigh on sentiment. Technical charts highlight key support near the 100-day SMA at $3,315, with a deeper decline likely if this level breaks decisively. On the flip side, resistance near $3,350–$3,375 limits upside potential unless Powell delivers a dovish surprise.

Ultimately, Powell’s remarks will be pivotal in shaping market expectations, dictating near-term USD flows, and determining whether Gold resumes its slide or stages a rebound. Until then, traders are bracing for potential volatility in both the FX and precious metals markets.