Gold Price Forecast: XAU/USD could react significantly in either direction depending on Powell's tone

Gold snapped a four-week winning streak as it lost more than 2%. As focus shifts to key data releases from the US and central bankers' appearance at the Jackson Hole Symposium next week, sellers look to retain control, FXStreet’s Eren Sengezer reports.

Powell's comments could have a significant impact on the dollar's valuation

“The S&P Global will publish the preliminary Manufacturing and Services PMI surveys for August on Tuesday. In case the surveys point to softer inflation, the dollar could find it difficult to preserve its strength and help XAU/USD recover and vice versa. A significant decline in headline PMIs could also weigh on the greenback.”

“July New Home Sales data will also be looked upon for fresh impetus. A straightforward market reaction with a disappointing print hurting the USD could be witnessed.” 

“On the second day of the annual Jackson Hole Symposium, on Friday, FOMC Chairman Jerome Powell will be delivering a speech. In case Powell pushes back against the market view of the Fed turning dovish in the second half of 2023, the dollar should be able to continue to outperform its rivals and drag XAU/USD lower. On the other hand, a relief rally could be triggered in case the chairman hints at a 50 basis points (bps) rate hike in September rather than a 75 bps increase. In that case, US T-bond yields could fall sharply and open the door for a decisive rebound in gold.”