Gold (XAU/USD) bounced back from a two-week low near the $3,324 region in early Asian trading on Monday, climbing to fresh daily highs. The recovery was supported by growing conviction that the U.S. Federal Reserve will resume rate cuts in September, weighing on Treasury yields and lending support to the safe-haven metal. Repositioning ahead of U.S. President Donald Trump’s meeting with Ukrainian President Volodymyr Zelensky and European leaders to discuss a potential peace deal with Russia also underpinned demand.
However, gains remain capped as the U.S. Dollar (USD) edges higher, with investors scaling back expectations of an aggressive Fed easing cycle. A broader risk-on mood in markets is also tempering demand for bullion. Traders now await further clarity from the Fed’s policy outlook, with attention on Wednesday’s FOMC Minutes and Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium later this week.
Market Drivers:
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Fed policy expectations: Markets remain convinced the Fed will cut rates in September. CME FedWatch data also points to at least two 25-basis-point cuts by year-end.
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Geopolitics: Trump and Zelensky are set to meet Monday, followed by broader talks with European leaders on ending the war in Ukraine. The outcome could shape safe-haven flows.
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U.S. data: Producer prices in July rose at the fastest pace since 2022, reducing bets for a 50 bps cut. The University of Michigan’s survey showed one-year inflation expectations climbing to 4.9% and five-year expectations to 3.9%, alongside a sharp drop in consumer sentiment to 58.6.
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Retail sales: July retail sales grew 0.5%, in line with forecasts, following an upward revision of June’s growth to 0.9%.
Outlook:
Traders will closely monitor this week’s Fed minutes and Powell’s Jackson Hole speech for confirmation of the September rate path. At the same time, geopolitical developments around Ukraine–Russia negotiations are likely to remain a key driver for gold’s safe-haven appeal in the near term.
