Gold (XAU/USD) continues to hold firm as uncertainty over inflation and the Federal Reserve policy outlook shapes market sentiment. Reduced expectations for another interest rate increase continue to support the precious metal, while developments around the Strait of Hormuz remain in focus. Markets will now focus on Kevin Warsh’s Jackson Hole speech for clearer guidance on interest rates and the next direction for gold.
Gold Awaits Fed Signals as Inflation Uncertainty Keeps Markets Cautious
Gold remains in consolidation as markets await fresh signals from Federal Reserve Chair Kevin Warsh. His Jackson Hole speech could provide important signals about the Fed’s next policy decision. Markets want to know whether another interest rate increase remains possible at the September meeting. However, uncertainty around monetary policy continues to provide underlying support for the precious metal.
The latest US inflation figures have added another layer of uncertainty to the outlook. Headline PCE inflation came in slightly stronger than expected. The index increased 0.2% during the month, while the annual rate reached 3.7%. Core PCE increased 0.2% for the month and 3.3% from a year earlier, matching expectations. Despite the stronger headline reading, markets continue to see a higher probability that the Federal Reserve will leave interest rates unchanged in September. The CME FedWatch Tool indicates roughly a 65% probability of no change in rates. Reduced expectations for another rate increase could continue to support gold.
Developments around the Strait of Hormuz also remain important for financial markets. Expectations for a possible reopening have eased some geopolitical concerns and supported market sentiment. However, attention remains firmly on Warsh as markets look for clearer guidance on inflation and interest rates. A strong focus on persistent inflation could increase expectations for tighter monetary policy and place pressure on gold. In contrast, limited signals on further rate increases could strengthen expectations for unchanged rates. This could provide renewed support for the precious metal and help prices stabilize.
Gold Price Rebounds after Retreat from Ascending Channel Resistance
The gold chart below shows a large ascending channel that has shaped price action over many years. The lower trendline has provided important support during major declines, while the upper trendline has acted as resistance during strong advances. Gold recently advanced toward the upper trendline but turned lower after facing resistance. Price has since declined from this area while remaining within the channel.
The broader structure remains positive despite the decline from the upper trendline. Gold remains firmly within the channel and continues to trade in the upper half of the formation. The chart also highlights two former horizontal resistance zones marked by the dashed lines. Price broke above each zone before extending its advance. These breakouts helped strengthen the larger positive price structure.
The upper channel trendline remains the key resistance area to watch. Renewed strength could bring this trendline back into focus. A clear break above the resistance could support further gains. However, another rejection from this area could lead to renewed weakness.
Gold Outlook: Warsh’s Fed Signals Could Shape the Next Move
Gold remains firm as markets assess inflation risks and the outlook for interest rates. Reduced expectations for another interest rate increase continue to support the precious metal. Kevin Warsh’s Jackson Hole speech could provide further direction on the policy outlook. Meanwhile, the technical structure remains positive as gold trades in the upper half of its ascending channel. The upper trendline remains the key resistance area. A clear break above this level could support further gains, while another rejection could bring renewed weakness.
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