Powell’s speech could bring more volatility across the markets, including gold

Gold prices keep climbing for the fourth session in a row on Thursday as the US dollar demand has eased somehow, albeit the reserve currency looks steady at the current levels after yesterday’s short-lived rally to fresh June highs.

Interestingly, the precious metal is rallying along with stocks as global equities edge higher due to a decline in yields. The benchmark 10-year Treasury yield dropped more than 11 basis points to 4.21%, retreating from 4,35%, its highest level since 2007 registered at the start of the week. The risk-on tone is also buoyed by Nvidia shares that jumped on hopes of stronger quarterly results. The report after the bell showed that the company beat Wall Street’s lofty expectations, with profits exploding thanks to the chipmakers’ artificial intelligence business.

Now, investor focus shifts towards a major event of the week for markets. It is a speech by U.S. Federal Reserve Chair Jerome Powell at a Jackson Hole. The event could bring more volatility across the markets, including gold.

During the recent ascent, the XAUUSD pair climbed back above the $1,900 psychological level to stage a strong bounce from March lows registered around $1,885 at the start of the week. As a result, the bullion is now challenging the descending 20-DMA, oscillating around $1,920. A decisive break above this moving average would pave the way to a more sustainable recovery, with the immediate target arriving at $1,925, followed by the 55-DMA, today at $1,933.

Meanwhile, the US dollar holds steady after yesterday’s retreat from fresh June highs. The USD index briefly peaked just below the 104.00 figure before retreating amid profit-taking as Treasury yields declined and risk demand intensified.

Still, despite the rallying stocks, the greenback stays afloat in anticipation of Powell’s speech that could push the dollar to fresh local highs if the Fed governor delivers a hawkish message ahead of the weekend. In this scenario, gold may come under renewed selling pressure ahead of the weekend.


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