Gold prices slipped during Monday's Asian deals, giving back part of last week’s 1.1% rally as investors booked profits ahead of fresh United States inflation data.
By 3:35 pm AEST (5:35 am GMT), spot gold was down $6.55, or 0.2%, at US$3,364.63 per ounce, retreating from Friday’s surge above $3,370.
The move follows Fed Chair Jerome Powell’s dovish comments at the Jackson Hole Economic Symposium, where he signalled that rate cuts could begin as soon as September.
“Overall, while the labor market appears to be in balance, it is a curious kind of balance that results from a marked slowing in both the supply of and demand for workers,” Powell noted.
“This unusual situation suggests that downside risks to employment are rising. And if those risks materialize, they can do so quickly in the form of sharply higher layoffs and rising unemployment.”
Analysts at ANZ observed: "Powell highlighted that with tariffs still working their way through the economy, which could temper their enthusiasm for an aggressive rate cut cycle.
"Last week Jeff Schmid said inflation slightly outweighs labour market risks while Raphael Bostic said he still expects just one cut this year."
Markets reacted swiftly, with the CME Group Fed Watch Tool showing an 87.3% probability of a September rate cut, up from 75% before Powell’s speech.
The U.S. dollar has attempted to recover but remains constrained by expectations of looser policy. St. Louis Fed President Alberto Musalem cautioned that more data was needed before supporting a rate cut, saying inflation remains above the central bank’s 2% target, according to Reuters.
Looking ahead, traders are awaiting U.S. new home sales figures and further commentary from Fed officials for short-term direction.
However, the key focus remains Friday’s release of the core personal consumption expenditures (PCE) price index, the Fed’s preferred inflation gauge, which could confirm or challenge expectations of aggressive easing this year.
