Gold slides as Dollar, yields recover, Powell’s speech in focus; silver down 1.6%

Gold prices dropped over 1% on Thursday, weighed down by a strengthening dollar and rising Treasury yields, as traders awaited Federal Reserve Chair Jerome Powell's speech for further insights on potential rate cuts.

As of 12:14 p.m. ET (1614 GMT), spot gold fell 1.2% to $2,483 per ounce, following a record high of $2,531.60 on Tuesday. U.S. gold futures also declined 1.1% to $2,519.50.

“Gold prices remained range-bound, trading between $2,500 and $2,510 in Comex and ₹71,600 to ₹71,850 in MCX. Market participants have largely priced in an expected 0.25bps interest rate cut for September, but a potential 0.50bps cut has not been fully factored in. While the anticipated September cut should provide some support for gold, the upside appears limited as further price movements will depend on how frequently and at what pace the Fed decides to implement additional cuts in future meetings. For the coming days, gold is likely to trade within a range of $2,480 to $2,525 in Comex, and between ₹71,000 to ₹72,350 in MCX,” said Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities.

What's weighing on gold prices?

The dollar index increased by 0.4% against its competitors after data revealed that U.S. jobless claims rose more than anticipated last week. Additionally, benchmark U.S. 10-year yields saw an uptick.

Attention now turns to Powell's upcoming speech on Friday at the Jackson Hole Economic Symposium. The minutes from the Federal Reserve's July 30-31 meeting, released on Wednesday, indicated that officials were leaning strongly towards a rate cut next month.

On Thursday, at least two Federal Reserve officials voiced their support for a rate cut at the central bank's policy meeting next month. Lower interest rates reduce the opportunity cost of holding non-yielding bullion.

Most brokerages anticipate a 25-basis point interest rate cut by the Fed in September, while J.P. Morgan, Citigroup, and Wells Fargo predict a 50-basis point reduction.

“Gold started the week with a decisive renewal of all-time highs, reaching the maximum spot price of $2531 per troy ounce. However, the bulls failed to seize the initiative finally, and on Thursday, gold lost more than 1%, falling back to the depths of the upward trend established in April. We also pay attention to the exhaustion of the growth momentum. On daily timeframes, a divergence is forming between a sequence of increasingly higher price highs and increasingly lower RSI highs. Trading within the above trend opens the door for a relatively quick pullback to $2420. It will be possible to speak about the break of the upward trend only when the price falls below $2380 - the previous local lows,” said Alex Kuptsikevich, the FxPro senior market analyst.

Spot silver dropped by 1.6% to $29.15 per ounce, platinum declined by 1.7% to $947.35, and palladium decreased by 2.5% to $927.37.