Powell Hints Rate Cut

Gold slips as US Dollar strengthens; Powell’s dovish signal may limit further downside
🗓 Published: Monday, August 25, 2025 – 06:31 GMT

Gold prices edged lower in early European trading on Monday, slipping to around $3,350 per ounce, weighed down primarily by a stronger US Dollar. However, growing optimism over a potential Federal Reserve rate cut in September — following remarks by Fed Chair Jerome Powell at the Jackson Hole symposium — could help cap further losses for the yellow metal.

In his speech, Powell opened the door to a rate cut at the upcoming meeting, though he cautioned that persistent inflation pressures could complicate that path. He described the current US economic landscape as “challenging,” with inflation risks now tilted to the upside and employment risks to the downside. Such dovish positioning could support gold, as lower interest rates reduce the opportunity cost of holding non-yielding assets like bullion.

Separately, rising tensions between Russia and Ukraine may further boost safe-haven demand for gold. Ukrainian President Volodymyr Zelensky, in an Independence Day address, vowed to continue fighting “until our calls for peace are heard.” His comments came after Moscow accused Ukraine of launching drone strikes on Russian power and energy facilities, including a fire at a nuclear plant in the Kursk region.

Gold traders are now awaiting Thursday’s release of the preliminary estimate for US Q2 GDP. The economy is expected to have grown at an annualized rate of 3.0%. A stronger-than-expected reading could lift the greenback and exert downward pressure on the USD-denominated metal.

Market moves:

• St. Louis Fed President Alberto Musalem said Friday he would need more data before backing a September rate cut, warning inflation remains above the Fed’s 2% target.
• Boston Fed President Susan Collins noted that the US economy’s fundamentals are relatively strong, but tariffs could have a larger and more persistent inflationary impact than currently assumed.
• Russian Foreign Minister Sergey Lavrov said President Vladimir Putin is ready to meet Zelensky when a summit agenda is prepared, but no meeting is currently planned.
• According to the CME FedWatch Tool, the probability of a 25 bps cut next month rose to about 85% following Powell’s remarks, up from 75% beforehand.
• Physical gold demand in key Asian hubs remained subdued last week, while Indian jewelers resumed purchases ahead of the festival season.

Technical outlook:
Although gold is trading lower on the day, it remains above the key 100-day exponential moving average on the daily chart, maintaining its longer-term bullish bias. The 14-day Relative Strength Index hovers near the midline, suggesting neutral momentum in the short term.

Key resistance lies in the $3,400–$3,410 zone, encompassing the psychological barrier, the upper Bollinger Band boundary, and the August 8 high. A sustained break above could open the door toward $3,439 (July 23 high), followed by the $3,500 round figure.
On the downside, initial support is seen at $3,315 (August 19 low). A break below this could extend losses toward $3,285, with the next level to watch at $3,268, aligning with the 100-day EMA.