Gold Eyes $2,532 as Fed Rate Cut Looms; Key Economic Data to Watch Next Week
Gold prices experienced a notable surge on Friday, rising over 1% to trade around $2,510. This boost came after Federal Reserve Chair Jerome Powell’s dovish remarks at the Jackson Hole Symposium, where he expressed confidence that inflation is steadily approaching the Fed’s 2% target.
Powell’s suggestion that the Fed could soon cut interest rates sent the US Dollar and Treasury bond yields lower, contributing to gold’s strong performance.
The XAU/USD pair climbed from a daily low of $2,484, reflecting growing market optimism about the potential for a more accommodative monetary policy.
Following Powell’s comments, the US Dollar Index (DXY) dropped 0.82%, closing at 100.68, while US Treasury bond yields slipped, with the 10-year note falling five basis points to 3.80%.
This market reaction has increased expectations of a significant rate cut at the Fed’s September meeting. According to the CME FedWatch Tool, traders now see a 73.5% chance of a 25 basis point cut, with the likelihood of a 50 basis point cut rising to 36.5%—up from 24% the previous day.
Key Economic Data to Watch in the Week Ahead
As the market digests Powell’s comments, attention will shift to a series of critical economic data releases scheduled for the upcoming week, which could further influence gold prices and the broader financial markets. Here are some of the key data points to watch:
- Monday, August 26: The Core Durable Goods Orders report is expected to remain flat at 0.0%, down from the previous 0.4%, while the Durable Goods Orders figure is projected to jump to 4.0%, rebounding from a steep decline of -6.7% in the prior month. A stronger-than-expected reading could bolster the USD, potentially capping gold’s gains.
- Tuesday, August 27: The S&P/Case-Shiller Composite-20 Home Price Index (HPI) year-over-year is forecasted to slightly increase to 6.9%, up from 6.8%. Meanwhile, the CB Consumer Confidence Index is expected to dip slightly to 100.2, down from 100.3, while the Richmond Manufacturing Index is projected to improve, but still remain in negative territory at -14, up from -17.
- Thursday, August 29: The Preliminary GDP data for Q2 is expected to confirm a growth rate of 2.8% quarter-over-quarter, while Unemployment Claims are forecasted to edge up slightly to 234K from 232K. The Prelim GDP Price Index is also expected to stay flat at 2.3%. These figures will be crucial for assessing the health of the US economy and could significantly impact gold prices.
- Friday, August 30: The market will closely watch the Core PCE Price Index—the Fed’s preferred inflation gauge—which is expected to remain unchanged at 0.2% month-over-month. The Chicago PMI is projected to dip to 44.4 from 45.3, while the Revised University of Michigan Consumer Sentiment Index is expected to tick up slightly to 67.9 from 67.8.
Gold Price Technical Outlook: Eyes on $2,532
As of Friday, gold closed around the $2,512 mark, maintaining a slight bullish bias after breaking above its 50-day Exponential Moving Average (EMA). The technical indicators suggest that gold could continue its upward trajectory as the new week begins.
Immediate resistance is expected around $2,532, and a break above this level could see the precious metal target $2,555 and possibly $2,580. On the downside, gold has support near $2,499, with further levels at $2,477 and $2,452. The Relative Strength Index (RSI) stands at 62.36, signaling bullish momentum, though it is approaching overbought conditions.
Conclusion: Bullish Momentum Set to Continue
Given Powell’s dovish remarks and the upcoming key economic data, gold’s bullish momentum is likely to persist in the week ahead. As long as the price holds above the $2,500 level, traders should watch for further gains, particularly if key resistance levels are breached. The potential for a significant rate cut in September remains a key driver, making the upcoming economic data releases crucial for determining gold’s next move.
