Jerome Powell's recent Jackson Hole address marked a notable shift in the Fed's tone - one that has reverberated throughout markets and reinvigorated gold's appeal.

The Federal Reserve chair underscored mounting concerns about a cooling jobs market, while acknowledging inflation risks remain real - a delicate balancing act that traders greeted by pricing in an 85 per cent chance of a 25‐basis‐point cut in September, with further easing anticipated before year‐end. Financial markets were quick to react: US Treasury yields and the dollar both declined, setting the stage for broader asset gains.

As this shift took hold, gold's trajectory turned upward. After deflating slightly mid-week to around $3,337.95 per ounce amid a firmer dollar, bullion rebounded above $3,390, buoyed by the dovish sentiment.

According to Reuters data, spot gold inched down 0.1 per cent at $3,370.14 per ounce, as of 0957am ET on Monday, after hitting its highest level since August 11 on Friday. US gold futures for December delivery also fell 0.1 per cent to $3,414.90.

Ahmad Assiri, research strategist at Pepperstone, said gold held firm near $3,350 per ounce extending its recovery from a lower range as investors digest the dovish tone struck by Fed Chair Powell at Jackson Hole.

“By downplaying inflation risks, Powell reassured markets that the policy path is tilted toward easing rather than renewed tightening, a backdrop that naturally supports the case for the yellow metal. The near-term risk-reward balance has shifted in gold's favour. Powell's remarks fuelled conviction that policy easing lies ahead, even if that view arguably runs ahead of incoming data. In this context, a dovish Fed provides the platform for a higher leg in gold, particularly if economic releases fail to substantiate Powell's optimism.”

Analysts said the backdrop is both supportive and tricky for gold. Its recent climb reflects renewed safe-haven demand sparked by Powell's pivot and anticipated rate cuts, yet markets remain wary. Analysts stress that any further move by the Fed will be data-dependent - not predetermined - and that structural constraints may prevent aggressive easing. As Jeffrey Roach of LPL Financial cautions, long-term shifts in the economy cloud the outlook beyond September.

Gold's near-term path remains constrained. Market watchers describe prices as consolidating within a defined range, with immediate breakout unlikely unless stronger signals emerge from economic indicators or policy pronouncements. Analysts highlight how incoming macro data - such as PCE inflation, GDP, and Fed official remarks - will chart the direction forward.

On the technical front, gold is tugged between upside ambition and downside risk. Alex Kuptsikevich of FxPro, view the consolidation since April as ominous - suggesting a breakout could come - but warn that overstretched conditions may expose the metal to a sharp correction toward $3,000 or even $2,200 per ounce. In an extreme bullish scenario, however, gold might surge toward $4,600 per ounce if the Fed adopts markedly softer policy.

Complementary insights come from precious metal analysts who describe a recalibration underway but no breakout yet, with next week's PCE report seen as pivotal. Chantelle Schieven of Capitalight Research emphasises that while gold remains well-supported, gains may already reflect the expectations of a September cut.

Meanwhile, broader trends bolster gold's resilience. Central bank purchases remain robust in 2025, providing structural support to bullion well beyond speculative positioning.

Rising geopolitical instability - most recently in the Middle East - continues to elevate gold demand, as does lingering“gold fatigue,” which has prompted flows into metals like platinum, now up sharply this year.

Despite the volatility, gold remains a bedrock in portfolios. It continues serving as a hedge against inflation, currency pressures, and global debt concerns - an anchor as structural risks persist.

Altogether, the precious metal appears to be walking a tightrope: lifted by Fed easing hopes and deep structural support, yet hemmed in by economic uncertainty and the Fed's caution. The result is a near-term consolidation in the $3,350–$3,400 range, with potential for a breakout driven by events and data.

Bullion market experts argue that Powell's Jackson Hole remarks jolted gold's upward momentum, yet the rally remains capped by caution.“Structural tailwinds persist, but a decisive breakout awaits clearer guidance from the Fed and fresh data. At this juncture, gold is staging a poised consolidation - set to break out only when the macro narrative becomes sharper.”

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