Gold Price Forecast: XAU/USD trades firmly around $3,370 as Fed’s Powell guides dovish outlook
LONDON (August 25) Gold price (XAU/USD) holds onto gains near Friday’s high around $3,370.00 during the European trading session on Monday. The precious metal trades firmly as Federal Reserve (Fed) Chair Jerome Powell has signaled that he is open to unwinding monetary policy restrictiveness in his speech at the Jackson Hole (JH) Symposium on Friday.
The adaptation of a dovish stance by Fed Chair Powell on the interest rate outlook surprised global markets as experts anticipated him to reiterate a “wait and see” approach on interest rates.
"Nonetheless, with policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance," Powell said. He further added that the Fed could start reducing interest rates quickly if downside labor market risks start materializing.
Jerome Powell didn’t explicitly call for interest rate cuts in the September meeting, but traders are confident that the Fed will reduce interest rates in the policy meeting next month, according to the CME FedWatch tool.
Lower interest rates by the Fed bode well for non-yielding assets, such as Gold.
Fed Powell’s surprisingly dovish remarks have dampened yields on interest-bearing assets. 10-year US Treasury yields trade near Friday’s low around 4.27%. Meanwhile, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, rises to near 98.00. Still, the DXY is close to its almost four-week low, which is around 97.70.
FXStreet
