Following the Gold Price Ahead of US Durable Goods Orders

Gold reached a new high of $2,531 early in the week but experienced a sharp decline on Thursday, falling to $2,470 after a $60 drop. This decline followed positive US economic data, including stronger home sales that reversed the previous month’s declining trend, and a Services PMI that increased by more than 55 points, indicating solid growth in the services sector. But FED’s Powell ignored the data and turned officially dovish, which sent Gold above $2,500 again.

Gold Chart H4 – MAs Keeping XAU Supported

Powell’s Comments and Gold’s Recovery

However, gold buyers returned on Friday after Federal Reserve Chairman Jerome Powell confirmed that the monetary policy easing process had begun, suggesting the potential for rate cuts as early as September. As a result, gold prices rebounded strongly, finishing the week above $2,500. XAU/USD closed at $2,511.23, gaining more than 1.5% on Friday alone. This surge was driven by a decline in the US dollar and bond yields, following Powell’s dovish remarks at the Jackson Hole Symposium, which hinted at possible future rate cuts. This also led to a rise in Treasury yields and risk assets, such as stock markets and commodity currencies, further supporting gold’s strong performance.

Market Reactions and Expectations

Gold rose from a daily low of $2,484, reflecting growing market expectations for a more accommodative monetary policy stance. Powell’s non-committal stance on a 50 basis point rate cut at the upcoming meeting has led to increased speculation, with market participants now fully pricing in a 25 basis point cut in September. The likelihood of a larger 50 basis point cut has also increased, jumping to 37% from 23% on Thursday.

Upcoming Data and Gold’s Outlook

Today, the US will release core durable goods orders, which could influence gold prices. The Durable Goods Orders are expected to rise to 4.0%, recovering from a sharp decline of -6.7% in the previous month. Core orders are forecasted to remain flat at 0.0%, down from the prior 0.4%. A stronger-than-expected reading would likely support the US dollar, indicating resilience among US consumers, and could limit the upward movement in gold prices.

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Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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