Gold price (XAU/USD) drifts lower to around $3,350 during the early European session on Monday(25/8), pressured by a stronger US Dollar (USD). Nonetheless, rising optimism of a September rate cut following comments by Federal Reserve (Fed) Chair Jerome Powell at the Jackson Hole symposium might cap the downside for the yellow metal.

The Fed's Powell has opened the door to a rate reduction in the September meeting, but that position could become complicated if inflation pressures continue to rise. Powell added that the US economy is facing a "challenging situation," with inflation risks now tilted to the upside and employment risks to the downside. Dovish remarks from Powell could provide some support to the precious metal, as lower interest rates could reduce the opportunity cost of holding Gold.

Additionally, the escalating tensions between Russia and Ukraine might contribute to gold's upside. Ukrainian President Volodymyr Zelensky said that the country would continue to fight for its freedom "while its calls for peace are not heard," in a defiant address to the nation on its independence day, per BBC. His comments came after Moscow said Ukraine had attacked Russian power and energy facilities overnight, blaming drone attacks for a fire at a nuclear power plant in its western Kursk region.

Source: FXstreet