📊 Gold is under pressure due to uncertainty about Fed interest rate path

Gold prices (XAU) fell by 0.12% on Thursday despite a weakening U.S. dollar (USD) as investors continued to recalibrate expectations around the Federal Reserve’s policy path. A weaker U.S. dollar typically supports gold, but the market appeared to focus instead on mixed signals from economic data and central bank commentary. Investors remain cautious, awaiting clearer confirmation of the Fed's rate path amid growing political and macroeconomic uncertainty.

👉 Possible effects for traders

Speculation is mounting that U.S. President Donald Trump may announce his nominee for the Fed Chair role in September or October. Markets anticipate a candidate who is inclined towards a more accommodative monetary policy. Meanwhile, Fed Chair Jerome Powell indicated that the absence of new tariffs would contribute to disinflation, potentially opening the door to multiple rate cuts if aggressive trade measures are avoided. His comments reinforced the notion that the Fed remains flexible and data-dependent but fell short of committing to immediate easing.

Recent U.S. economic data painted a mixed picture. A revised gross domestic product reading showed the economy contracted by 0.5% in Q1, fuelling dovish expectations. However, this was partially offset by a drop in jobless claims towards a five-week low and a surprising surge in durable goods orders—the strongest in over a decade—suggesting underlying resilience.

XAUUSD continued declining during the Asian and early European trading sessions. Market attention is now on the Personal Consumption Expenditures (PCE) Price Index report due at 12:30 p.m. UTC today. The data could provide further insights into how the Fed plans its monetary policy path. Higher-than-expected figures will likely deepen downward pressure on XAUUSD, while weaker numbers could give gold bullish momentum.

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