The XAU/USD pair experienced a notable decline after a brief rally following Federal Reserve Chair Jerome Powell's latest remarks, with bearish technical structures reasserting control. Gold prices initially bounced above $2,350, but the move proved short-lived as sellers quickly pushed the metal back below $2,320.
Technical Breakdown - Analyst Valeriya Breakout noted that XAU/USD remains bearish, providing a Change of Character (CHoCH) to the downside while trading below a significant level. On the 4-hour chart, gold broke down from beneath a noted structure zone between $4,580-$4,590, with the price currently near $4,572 and expected to move lower after a pullback into the supply zone. The daily chart from SIRRILLAH projected bearish continuation from about $4,650 down to $4,000 on a stepped structure, with a red band of supply in the upper $4,900-$5,000 zone.
Fundamental Drivers - Market participants interpreted Powell's tone as less dovish than anticipated. While the Fed signaled a potential pause in rate hikes, it stopped short of committing to cuts in 2025. This ambiguity triggered profit-taking among gold bulls. According to data from the CME FedWatch Tool, the probability of a rate cut in September dropped to 58%, down from 72% before the speech.
Market Reaction - The post-Powell bounce lacked conviction from the start. Volume on the COMEX showed only 12,000 contracts traded during the initial spike, compared to an average of 25,000 during similar events. Silver and platinum followed gold lower, with silver dropping 1.8% to $27.40. The U.S. Dollar Index rose 0.3% after Powell's speech, adding pressure on gold.
Expert Perspectives - Analysts at TD Securities described the move as a classic 'buy the rumor, sell the fact' reaction. Ole Hansen, head of commodity strategy at Saxo Bank, stated: 'The XAU/USD slip reflects a market recalibrating its expectations. Without a clear dovish signal, gold lacks a fresh catalyst to break higher.' Net long positions in gold futures fell by 8,000 contracts in the latest reporting week, according to CFTC data.
Key Levels - Immediate resistance sits at $2,340, with the 50-day simple moving average acting as a dynamic ceiling. A break below $2,300 could open the door toward the $2,260 support zone. The Relative Strength Index (RSI) slipped from 55 to 48, indicating a shift to bearish momentum.
