Gold steadies as risk sentiment improves, Fed Chairman Powell returns to focus
News | 06/25/2025 12:04:25 GMT | By Tammy da Costa CFTe® |
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Gold remains steady while markets await new home sales data in the US for further evidence of the health of the US economy.
Federal Reserve Chairman Powell is expected to testify before the Senate Banking Committee, providing additional insights on monetary policy, inflation, and interest rates, factors that may serve as additional catalysts for gold.
XAU/USD steadies above $3300 after three days of losses, with risk appetite curbing short-term gains.
Gold (XAU/USD) trades in a narrow range on Wednesday, as markets continue to show signs of optimism following Tuesday's ceasefire between Israel and Iran.
At the time of writing, gold is stabilizing above $3300 during the European session, with volatility remaining low. Market attention is now focused on key releases of US macroeconomic data and the second day of Federal Reserve Chairman Jerome Powell's testimony.
As tensions in the Middle East continue to ease, Wednesday's economic data releases and Powell's comments may serve as an additional catalyst for gold.
New home sales data in the US for May, scheduled for release at 14:00 GMT, could provide an additional catalyst for gold prices. This report offers insights into the strength of the US housing market.
At the same time, Jerome Powell returns to Capitol Hill to speak before the Senate Banking, Housing, and Urban Affairs Committee, where any change in tone or mention of inflation risks could push interest-sensitive assets, including gold.
Summary of daily market drivers: Gold price drivers, Fed forecasts, upcoming risks
Federal Reserve Chairman Powell continues his two-day testimony before Congress on Wednesday, following his appearance before Congress the day prior, where he answered questions about the economy, inflation, and the timing of potential rate cuts. For gold, which moves inversely with interest rates and the US dollar, Powell's comments have a particular impact.
Powell reiterated that the Fed "is not in a hurry to cut rates," noting that inflation data has been inconsistent and that price pressures related to tariffs are likely to show up in June or July data.
Powell's tone remained consistent with the Federal Open Market Committee (FOMC) meeting on June 18, where policymakers anticipated two rate cuts in the second half of the year. Nonetheless, market participants remain divided on the timing and reliability of those cuts, with prices remaining sensitive to incoming data.
Powell also added, "If it turns out that inflation pressures remain contained, we will reach a point where we lower rates sooner rather than later, but I would not like to signal a specific meeting." He clarified that a significant deterioration in the labor market would also impact the Fed's decisions but emphasized, "we don't need to rush as the economy is still strong and the labor market is strong." This highlights the data-dependent stance, making gold sensitive to incoming numbers.
Consumer confidence data from the US released on Tuesday added to that state of uncertainty. The Conference Board's Consumer Confidence Index fell to 93.0 in June, down from 98.4 in May. A more cautious consumer outlook may mean weaker spending ahead, which could affect the Fed's growth outlook and influence the timing of interest rate adjustments.
Geopolitical risks have receded for now, with the ceasefire between Israel and Iran holding for a second consecutive day. While the situation remains fragile, the absence of new escalations has pulled safe haven flows away from gold, placing more focus on economic and political factors to guide direction.
Looking ahead, Friday's release of the US Personal Consumption Expenditures (PCE) data, the Fed's preferred inflation gauge, will be critical. A weak report could revive expectations for rate cuts in the near term and provide new support for gold.
Technical analysis of gold: XAU/USD holds above the 50-day simple moving average at $3300
The price of gold is currently trading above the key psychological support level at $3300, with the RSI stabilizing near the 50 level on the daily chart, indicating a lack of momentum and uncertainty among traders.
At the time of writing, XAU/USD is stabilizing around the 50-day simple moving average at $3325.
Daily chart of gold (XAU/USD)
For the price to extend its recovery, it requires movement above the 20-day simple moving average at $3355. If bulls manage to surpass this obstacle, the next resistance level is likely at the psychological level of $3400.
However, if risk appetite improves, demand for safe havens may continue to decline in the short term. If gold prices face a deeper pullback below the $3300 level, the mid-range level from the April 7 low to the April 22 high (50% Fibonacci retracement level) could come into play as support at $3228.
Gold FAQs
Why do people invest in gold?
Gold has played a key role in human history, having been widely used as a store of value and a means of exchange. Currently, aside from its luster and use in jewelry, the precious metal is widely viewed as a safe-haven asset, meaning it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against currency devaluation because it is not dependent on any specific issuer or government.
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