Gold is clawing back modest gains in early European trading after sliding to its weakest level in over two weeks. The recovery comes as traders shift their focus to the Fed’s expected rate-cut cycle, with bond yields slipping and the dollar holding mixed.
Still, geopolitical risks and caution ahead of Powell’s Jackson Hole speech mean bulls may need more than short covering to extend this bounce.
Here's what you need to know:
1. Fed Cuts Still in Play, But Scaled Back
Markets are almost certain the Fed will ease in September, but traders are no longer pricing a jumbo 50 bp move. Instead, the CME FedWatch Tool shows odds of at least two 25 bp cuts by year-end. Softer expectations have kept Treasury yields under pressure, giving gold some breathing room.
2. The Dollar Finds Some Support
Last week’s PPI surprise, the fastest monthly gain since 2022, cooled talk of aggressive easing, drawing some demand back to the dollar. Short-term inflation expectations also ticked higher, with Michigan’s survey showing 1-year inflation at 4.9% (up from 4.5%). That mix has kept USD from breaking down, capping gold’s upside.
3. Geopolitics Back in Focus
Trump’s meeting with Ukraine’s Zelenskiy, followed by talks with European leaders, is seen as an attempt to push forward peace negotiations on Europe’s deadliest war in decades. Safe-haven flows have been muted for now, but any disruption could quickly spill into XAU/USD.
Ukraine's President Volodymyr Zelenskiy on Sunday hailed the decision by Washington to offer security guarantees to Ukraine, speaking a day ahead of his meeting in Washington with U.S. President Donald Trump.
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gmanetwork.com/news/topstorie…— #GMA Integrated News (#@gmanews)
10:30 PM • Aug 17, 2025
4. Traders Eye Jackson Hole for Clarity
The FOMC minutes on Wednesday and Powell’s remarks later in the week are the real catalysts for gold. Until then, positioning will likely stay cautious, with traders reluctant to chase breakouts in either direction.
5. Technical Outlook – Gold Needs a Strong Push
Gold is still trading inside a tightening triangle, holding just above $3,349 but struggling to build momentum. The first real test for buyers sits at $3,355. A clean break above that could open the way toward the $3,372–3,374 zone and then $3,400–3,410, which marks the recent monthly peak.
On the other side, support remains close by. The first line to watch is $3,346, with heavier pressure likely if price slips toward $3,324–3,323. Losing that floor would bring $3,300 and $3,282 back into play.
Momentum has started to turn positive again, but until gold finishes the day above $3,355 with follow-through, the risk is that it drifts sideways between $3,324 and $3,372 instead of breaking out.
The Takeaway:
Gold is holding its bounce, but conviction is thin. Rate-cut bets and softer yields are supportive, while a firm dollar and cautious sentiment keep bulls in check. For us traders, the real action may come after the Fed minutes and Powell’s Jackson Hole speech the events that could decide whether XAU/USD reclaims $3,400 or retests $3,300.