Gold Price Forecast: XAU/USD Holds Steady Near $3,370 as Fed Chair Powell Signals Dovish Policy Shift

Gold (XAU/USD) remains firm near Friday’s high around $3,370.00 during Monday’s European session. The precious metal continues to draw support after Federal Reserve (Fed) Chair Jerome Powell adopted a surprisingly dovish tone during his speech at the Jackson Hole Symposium.

Markets were expecting Powell to stick to a cautious “wait and see” approach. Instead, he acknowledged the growing downside risks in the labor market and opened the door to potential policy adjustments.

“Nonetheless, with policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance,” Powell stated. He also hinted that interest rates could be reduced quickly if labor market risks begin to materialize.

While Powell didn’t explicitly endorse a rate cut in the upcoming September meeting, traders remain confident that the Fed will ease policy soon. According to the CME FedWatch Tool, market participants are heavily pricing in a rate reduction next month.

Lower interest rates typically favor non-yielding assets like Gold, as they reduce the opportunity cost of holding such investments.

Following Powell’s remarks, yields on interest-bearing assets fell, with the 10-year US Treasury yield holding near Friday’s low of 4.27%. Meanwhile, the US Dollar Index (DXY) saw a modest rebound to just under 98.00, though it remains close to a four-week low around 97.70. The weaker dollar environment continues to support the Gold market.

Technical Analysis: Gold Consolidates Within Symmetrical Triangle

From a technical perspective, Gold is trading within a Symmetrical Triangle pattern—indicating a phase of volatility contraction and likely setting the stage for a breakout.

The triangle’s upper boundary is drawn from the April 22 high near $3,500, while the lower boundary connects the May 15 low around $3,180.86.

XAU/USD is currently hovering near the 20-day Exponential Moving Average (EMA) at around $3,350.00, suggesting a neutral bias in the short term.

The 14-day Relative Strength Index (RSI) remains trapped between 40 and 60, reinforcing a lack of clear momentum and trader indecision.

Support and Resistance Levels to Watch:Immediate support lies at the May 29 low of $3,245. A break below this level could trigger a decline toward the psychological support at $3,200, followed by the May 15 low at $3,121. On the upside, a sustained break above the psychological resistance at $3,500 would push Gold into uncharted territory, with potential targets at $3,550 and $3,600.