The dollar index fell against major currencies, while benchmark 10-year Treasury yields declined in response to Powell’s speech. Tai Wong, an independent metals trader in New York, noted, “Asset markets are reacting well, at least initially, to Powell’s general, but somewhat open-ended comment that it’s time for policy to adjust.”
Rate Cut Expectations Drive Gold Outlook
Traders are now pricing in a 67.5% chance of a 25 basis point cut in September, with a 32.5% probability of a more aggressive 50 basis point reduction. Alex Ebkarian, chief operating officer at Allegiance Gold, suggested that expectations of a rate cut could push gold prices to the $2,550-$2,600 range.
Gold’s Performance and Future Prospects
Despite retreating from its all-time high of $2,531.77 earlier in the week, gold has maintained its bullish momentum. The metal’s appeal as a non-yielding asset typically increases in a lower interest rate environment, supporting its upward trajectory.
Market Forecast: Cautiously Bullish
While the outlook for gold remains positive, traders should be prepared for potential volatility. The “buy the rumor, sell the fact” scenario could lead to short-term fluctuations, especially if the September rate decision aligns closely with current market expectations.
However, the broader trend suggests continued support for higher gold prices in the coming months. Factors such as geopolitical tensions, uncertainty surrounding the U.S. presidential elections, and the anticipation of an extended rate-cutting cycle are likely to underpin gold’s performance.