Gold (XAU/USD) came under renewed selling pressure during Thursday’s Asian session, struggling to extend its rebound from a three-week low. The yellow metal remains weighed down by a firmer US Dollar after the Federal Reserve’s July 30–31 meeting minutes signaled that officials remain more concerned about inflation than the labor market. The hawkish tone has reduced expectations for a sharp rate cut in September, boosting the Greenback and capping gains for non-yielding bullion.
Adding to the downside, optimism surrounding a potential breakthrough in the Russia-Ukraine peace process has further reduced demand for safe-haven assets. However, political tensions in the US provided some support for gold. President Donald Trump’s call for Fed Governor Lisa Cook to resign over mortgage fraud allegations, alongside his continued criticism of Fed Chair Jerome Powell, raised concerns about the central bank’s independence. This limited the Dollar’s upside and offered some relief to bullion.
Key Market Drivers
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Fed Minutes: Nearly all policymakers favored holding rates steady, while most emphasized the upside risks to inflation. Officials acknowledged economic threats but agreed that the current policy stance remains appropriate.
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Dollar Strength: Signs of persistent inflationary pressures have prompted investors to scale back expectations for aggressive Fed easing. This has kept the US Dollar near its strongest level in over a week, pressuring gold.
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Geopolitical Factors: Russian Foreign Minister Sergey Lavrov warned that attempts to resolve Ukraine’s security issues without Moscow were “a road to nowhere.” His remarks highlight lingering geopolitical risks that could still underpin safe-haven demand.
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Political Concerns in the US: Trump’s repeated attacks on Powell and demands for Cook’s resignation stirred worries about the Fed’s independence, tempering Dollar gains and cushioning gold’s downside.
Looking Ahead
Traders now await the release of flash global PMIs for fresh insights into economic momentum. US data, including weekly jobless claims and the Philly Fed Manufacturing Index, could also influence Dollar moves and short-term gold sentiment. However, the spotlight remains firmly on Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium, where investors will seek guidance on the Fed’s next steps in its rate-cut path.
