Gold (XAU/USD) maintained its position above the $2,500 mark for the third consecutive day, trading at $2,511 with little movement. This stability follows the release of the US Federal Reserve’s (Fed) July meeting Minutes, which hinted at the possibility of an interest rate cut in the upcoming September meeting, leading to a weaker US Dollar.
The US Dollar Index (DXY) fell sharply by over 0.20%, settling around 101.10, as investors reacted positively to the Fed’s Minutes. The document indicated that most Fed participants believed it could be appropriate to ease policy at the next meeting if economic data continued to align with expectations. The Minutes also highlighted that progress on inflation and the rise in the unemployment rate opened the door for a potential rate cut of either a quarter or a full percentage point.
Despite the unanimous decision to keep rates unchanged during the July meeting, many Fed officials considered the current rates as restrictive. The Minutes reflected a shift in focus towards achieving maximum employment, with inflation risks appearing to be less concerning.
As traders look ahead, attention will turn to a lighter economic calendar, including the release of Initial Jobless Claims, S&P Global PMIs, and housing data on Thursday. Additionally, all eyes will be on Fed Chair Jerome Powell’s address at the Jackson Hole Symposium on Friday, hosted by the Kansas City Fed in Wyoming.
