Gold prices experienced a slight decline on Friday as the U.S. dollar strengthened, with investors eagerly anticipating Federal Reserve Chair Jerome Powell's upcoming speech at the annual Jackson Hole symposium. Spot gold edged down by 0.2% to $1,333.01 per ounce, while U.S. gold futures for December delivery also fell by 0.2% to $1,376.
The U.S. dollar index lingered near a two-week high, diminishing the appeal of gold to foreign buyers. Federal Reserve officials displayed reluctance towards the idea of a rate cut in September, setting the stage for Powell's highly anticipated speech scheduled for 1400 GMT on Friday.
According to KCM Trade chief market analyst Tim Waterer, the potential for a Russia-Ukraine peace deal and the strength of the U.S. dollar are currently posing challenges for the gold market. However, Waterer noted that if Powell's message in his speech signals a dovish shift, the U.S. dollar may weaken, providing an opportunity for gold to rally.
Market indicators suggest a 75% probability of a quarter-point rate reduction next month based on CME's FedWatch tool. Recent labor data indicating a rise in U.S. jobless claims and unemployment claims hitting a near four-year high present a conundrum for Fed policymakers as they navigate signs of labor market weakness alongside inflation levels surpassing the central bank's 2% target.
Meanwhile, in the precious metals market, spot silver fell by 0.2% to $38.08 per ounce, platinum saw a 0.9% decline to $1,341.46, and palladium rose by 0.2% to $1,112.92.
As markets eagerly await Powell's speech for insights into the Federal Reserve's future monetary policy decisions, the interplay between economic indicators, geopolitical developments, and the performance of the U.S. dollar will continue to influence the trajectory of gold prices in the coming weeks.
