Gold recovers as US Dollar softens, markets eye Fed Minutes for policy clues

LONDON (August 20) Gold (XAU/USD) is attempting a cautious rebound on Wednesday, trading around $3,330 during the European session after briefly falling to a three-week low of $3,311 in early Asian trade. The modest recovery comes as the US Dollar (USD) retreats slightly from a one-week high, while traders brace for the release of the Federal Reserve’s (Fed) July meeting Minutes later in the day.

Gold prices are taking a breather after Tuesday’s sharp decline, as improving risk sentiment eases immediate safe-haven demand. A major meeting at the White House between US President Donald Trump, Ukrainian President Volodymyr Zelenskyy, and top European leaders has revived hopes for a diplomatic breakthrough in the Russia-Ukraine conflict. Market attention is now turning toward the possibility of a trilateral summit involving Trump, Russian President Vladimir Putin, and Zelenskyy, which Trump hinted could be in the works.

However, Moscow has not yet committed to such talks. Russian Foreign Minister Sergey Lavrov said any potential meeting would need to be “prepared gradually,” starting at the expert level before progressing through formal diplomatic channels. While no timeline has been established, the renewed engagement has lifted broader risk sentiment. That said, lingering geopolitical uncertainty continues to provide a modest cushion for Gold, as some safe-haven positioning remains in place.

Adding to the cautious tone, traders are also awaiting the release of the FOMC July meeting Minutes, which could shed light on the internal policy debate. The meeting stood out as the first since 1993 to feature two dissenting votes on the Board of Governors, with Christopher Waller and Michelle Bowman advocating for a 25 basis point (bps) rate cut instead of holding rates steady. The minutes may reveal how deep the divisions run within the Fed and whether a shift toward easing is gaining traction, which could significantly influence Gold in the near term. For now, the precious metal remains confined to a narrow range, with technical resistance near $3,330 limiting further upside.

Market movers: Markets cautious ahead of Fed minutes, Trump targets Powell

• The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, climbed to a one-week high of 98.44 earlier in the day but has since edged lower to 98.22, as traders pared back bullish positions ahead of the Fed’s July meeting Minutes, which could shed light on policymakers' evolving views on inflation and interest rates.
• US Treasury yields ease slightly across the curve for the second straight day, with the benchmark 10-year yield slipping to 4.296% and the 30-year holding near 4.891%. Meanwhile, the 10-year TIPS yield — seen as a proxy for real interest rates — declines by 5 basis points from an intraday high of 1.989% to 1.939%, according to CNBC data. The retreat in real yields offers modest support to Gold by lowering the opportunity cost of holding non-yielding assets.
• On the trade front, the US has expanded its 50% steel and aluminum tariffs to cover an additional 407 product categories, including auto parts, chemicals, plastics, and furniture components. The new measures, which took effect Monday, are designed to close loopholes and curb circumvention tactics. “Today’s action expands the reach of the steel and aluminum tariffs and shuts down avenues for circumvention, supporting the continued revitalization of the American steel and aluminum industries,” said Jeffrey Kessler, Under Secretary for Industry and Security at the Commerce Department.
• US Treasury Secretary Scott Bessent said in a Fox News interview on Tuesday that Washington has held “very good talks” with China on tariffs, as both sides explore a broader trade agreement during the current 90-day pause in tariff implementation. Bessent noted that “China is right now the biggest revenue line in the tariff income” and signaled more discussions ahead, adding, “I imagine we will be seeing them again before November.” While he said “the status quo is working pretty well,” the comments underline that US-China trade dynamics remain in flux, keeping markets alert to fresh developments.
• On Tuesday, Trump suggested the US might play a role in providing security guarantees, especially through air support. He said, “We’re willing to help them with things, especially, probably you could talk about by air, because there’s nobody that has the kind of stuff we have.” However, he made it clear that the US will not send troops to Ukraine. Trump also pushed for a peaceful resolution, saying, “I hope President Putin is going to be good, and if he’s not, it’s going to be a rough situation.” He added that Ukrainian President Zelenskyy “has to show some flexibility also,” signaling that both sides need to make compromises for a deal to happen.
• President Donald Trump renewed his attacks on Fed Chair Jerome Powell on Tuesday, accusing him of “hurting the housing industry” by keeping interest rates too high and calling for aggressive rate cuts. The remarks come just days before Powell’s highly anticipated speech at the Jackson Hole Symposium on Friday, where markets will look for clues on the Fed’s next move amid growing political pressure.

FXStreet