Gold (XAU/USD) kicks off the week on a softer footing after touching a two-week high on Friday, following Federal Reserve (Fed) Chair Jerome Powell's dovish remarks at the Jackson Hole Symposium that fueled a broad rally in precious metals. At the time of writing, the metal is trimming earlier losses and edging higher during the American session, consolidating near recent peaks around $3,370.

Powell gave his final annual speech at the Jackson Hole Symposium last Friday, where he emphasized the Fed's cautious approach to monetary policy in a shifting economic environment. "The stability of the unemployment rate and other labour market measures allows us to proceed carefully as we consider changes to our policy stance. Nonetheless, with policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance," Powell said. His remarks highlighted the Fed's balancing act. Tariff-driven price pressures could be a one-off shock, but he signaled that weakening job growth and an already restrictive policy stance are becoming the bigger concern. This shift reinforced market bets that interest rate cuts remain on the table for the coming months, even as inflation risks linger.

Markets interpreted Powell's tone as a clear dovish shift, prompting a sharp repricing of rate-cut expectations. According to Reuters, major brokerages including Barclays and BNP Paribas now expect a 25-basis-point (bps) cut in September, with some projecting another reduction in December. The CME FedWatch Tool now shows an 87% probability of a September rate cut, up from about 71% before Powell's speech. In response, Treasury yields slipped, Wall Street rallied, and the US Dollar retreated from two-week highs, providing a tailwind for Gold.

Source: Fxstreet