Where Is It Heading Amid U.S. Growth Uncertainty and Powell’s Openness to Rate Cuts?

August 25, 2025 Investorideas.com (www.investorideas.com
Newswire) a go-to platform for big investing ideas, including gold
stocks issues market commentary from Rania Gule, Senior Market
Analyst at XS.com – MENA.

Gold prices retreated to around $3,360 per ounce at the start of the
week, driven by renewed demand for the U.S. dollar as a traditional
safe haven amid global economic uncertainty. However, in my view,
this decline is merely a corrective move tied to profit-taking
rather than a structural shift in gold’s broader trend. The
fundamental backdrop supporting the precious metal remains intact,
both from the perspective of U.S. monetary policy and ongoing global
geopolitical risks. This makes gold more likely to retest higher
levels with every limited pullback.

Jerome Powell’s recent remarks at the Jackson Hole symposium
reinforced this outlook. Not only did he hint at the possibility of
a rate cut in September, but he also struck a dovish tone by
highlighting rising downside risks in the labour market and slowing
consumer spending. This reveals a paradox: the Fed is attempting to
reassure markets with policy flexibility, while simultaneously
acknowledging challenges that threaten growth. For gold, this is
supportive, as it lowers the opportunity cost of holding the metal
and strengthens its role as a hedge against fragile economic
expansion.

That said, inflation remains the Fed’s biggest hurdle. Should price
pressures stay above the 2% target, rate cuts may be delayed or
delivered at a more cautious pace than markets expect. In my view,
this would not necessarily hurt gold, since persistently high
inflation sustains demand for tangible assets, particularly gold. In
the short term, however, any upside surprise in inflation data could
boost the dollar temporarily and weigh on the metal.

On the geopolitical front, risks remain equally critical. Escalating
tensions between Russia and Ukraine have resurfaced after a wave of
drone strikes targeted Russian energy facilities, raising concerns
about potential spillovers to nuclear infrastructure. Ukrainian
President Zelensky’s pledge of an enduring fight further
underscores the unlikelihood of a near-term resolution.
Historically, the more tensions flare in sensitive regions, the
brighter gold shines as a safe haven. Any additional escalation
could provide the fuel needed for a decisive break above $3,400 and
possibly new highs in the medium term.

Meanwhile, traders are closely watching the preliminary U.S. GDP
reading for Q2. Expectations point to 3% growth, reflecting ongoing
resilience despite prior monetary tightening. Stronger-than-expected
data would strengthen the dollar and pressure gold in the short run,
while weaker growth would amplify rate-cut bets and directly support
the metal. In my view, even a positive surprise in GDP will have a
limited downside impact on gold, as markets today are more focused
on monetary policy trajectories than on single-quarter growth
figures.

Notably, divisions within the Federal Reserve have also emerged.
Alberto Musalem of St. Louis struck a cautious note, warning that
inflation remains above target, while Boston’s Susan Collins
highlighted economic resilience but flagged tariff risks. This
divergence illustrates a wait-and-see stance inside the Fed,
leaving markets to interpret mixed signalsan environment that
historically favours gold’s volatility and safe-haven appeal.

Physical demand in Asia remains relatively subdued, particularly in
China and India, due to price swings. Yet with India’s festive
season approaching and Chinese retail investors hedging against a
weak property and equity market, I expect a gradual revival in
physical demand that will underpin gold’s longer-term uptrend.
Physical buying often acts as the steady, underlying driver of
sustained market trends.

Recent price action also shows that every dip is being met with
renewed buying. The swift move from $3,330 to $3,380 following
Powell’s speech is clear evidence that traders are seeking entry
points at lower levels. I expect this pattern to persist, with any
dip below $3,350 seen as an opportunity to build new long positions
ahead of stronger catalysts such as inflation data or Fed decisions.

In conclusion, gold is trading in a delicate zone, caught between
the strength of the dollar and the Fed’s policy stance, as well as
U.S. growth uncertainty and ongoing geopolitical tensions. My
outlook leans toward the downside pressures being limited and
temporary, while the broader trend remains bullish, supported by
rate-cut prospects and eroding confidence in global growth. It would
not be surprising to see gold testing the $3,400-3,450 range in the
near term if monetary and geopolitical factors align favourably. For
now, gold remains more of a buy-on-dips asset than one at risk of
collapse.

Technical Analysis of Gold ( XAUUSD ) Prices:

The 4-hour gold chart shows improving bullish momentum following a
rebound from the strong support area near $3,320, which aligns with
the 100-day simple moving average. This rebound has pushed prices
back into the Golden Zone between the 0.618-0.786 Fibonacci
levels, enhancing the prospects for continued upward movement in the
short term. The stability of the RSI above 50 further confirms that
buyers remain in control of the trend at this stage.

If buying momentum persists, gold will face initial resistance at
$3,379 (last Friday’s high), followed by the key psychological
barrier at $3,400. A decisive break and close above this level would
reopen the path toward the next major resistance at $3,430. This
scenario coincides with the potential bullish crossover of the
21-day and 50-day moving averages, which would provide buyers with
additional confidence and encourage more traders to strengthen their
long positions.

On the other hand, failure to break through the $3,379-$3,400 zone
could trigger a pullback toward support at the moving averages near
$3,346. A break and close below this level would confirm weakening
bullish momentum and pave the way for a deeper decline toward
$3,320a crucial line of defence for bulls. Sustained trading below
this level would invalidate the positive bias and hand control back
to sellers in the medium term.

Support levels: 3,346 – 3,320 – 3,300

Resistance levels: 3,379 – 3,400 – 3,430

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