Gold Prices Drop as Dollar Strengthens Ahead of Powell's Speech

Gold prices retreated on Friday in Asian trading, pressured by a strengthening dollar as expectations of U.S. interest rate cuts before Federal Reserve Chair Jerome Powell’s speech faded. Other metals also dropped, as the greenback firmed, on track for significant weekly gains.

Spot gold saw a minor decline of 0.3%, trading at $3,328.37 per ounce, while gold futures followed suit, down 0.3% at $3,371.15 per ounce.

However, gold’s losses were capped by safe-haven demand as concerns over a stalled Russia-Ukraine peace deal grew, despite ongoing U.S. diplomatic efforts.

Gold on Track for Second Week of Losses

Gold prices are down 0.2%-0.5% this week, with the metal set for its second consecutive week of losses. Traders reduced their expectations for a September rate cut after the Federal Reserve’s July meeting minutes showed a preference for holding rates steady.

Fed futures now price in a 73.1% chance of a 25 basis-point rate cut in September, a sharp drop from the previous week's 92.2%.

Pressure on Gold From Prolonged High Rates

The ongoing high-rate environment is pressuring gold and other non-yielding assets, as higher rates increase the opportunity cost of investing in these metals compared to yielding assets like U.S. Treasuries.

Attention Turns to Powell’s Jackson Hole Speech

The focus now shifts to Powell’s speech later on Friday at the Jackson Hole Symposium, where investors are eager for clarity on the Fed’s future policy actions.

Powell’s comments on the recent slowdown in inflation and cooling job market could further shape expectations. His remarks on the inflationary impact of trade tariffs by President Trump have also contributed to the market’s cautious stance, leading to a reduced likelihood of a September rate cut.

The dollar’s rally, up by 0.9% this week, weighed on metals. Platinum fell by 0.7% to $1,347.85 per ounce, while silver dropped 0.2% to $38.0735 per ounce, though both metals were on track for mild weekly gains.

Among industrial metals, copper prices declined as well, with benchmark copper futures on the London Metal Exchange down 0.2% to $9,724.10 per ton, and COMEX copper futures slipped 0.3% to $4.4420 per pound.

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