Will Jackson Hole spark a rally or breakdown for gold prices?

Gold hovered around $3,380 early Tuesday, with investors holding off on major moves as they await the US Federal Reserve (Fed) Minutes and the Jackson Hole Economic Symposium later this week.

Remarks from Fed Chair Jerome Powell at the Jackson Hole symposium, scheduled for August 21-23, may provide insight into the central bank's economic outlook and policy framework.

At the time of writing, the December gold contract on COMEX was at $3,382.20 per ounce, up 0.1% from the previous close. 

Gold stuck in a range

Markets appear cautiously optimistic after US President Donald Trump and Ukrainian counterpart Volodymyr Zelenskiy met Monday, promising an end to Russia-Ukraine hostilities and hinting at a future trilateral meeting.

Zelenskiy expects security guarantees for his country to be finalized within 10 days, following discussions with Trump and European leaders.

According to Reuters, NATO Secretary General Mark Rutte stated in a Monday Fox News interview that "Trump's meeting with Zelenskiy and other European and NATO partners was very successful."

Trump characterised his meeting with Zelenskiy as "very good." He also stated in a social media post that he had contacted Russian President Vladimir Putin and was in the process of arranging a meeting between Putin and Zelenskiy.

“This optimism curbs the haven demand for Gold, capping its upside, while the downside remains cushioned due to heightened expectations that the Fed will lower interest rates twice this year, starting from September,” Dhwani Mehta, senior analyst at FXstreet, said in a report. 

Gold tends to perform well when interest rates are low and uncertainties are high.

“(Gold) continues to consolidate in a range that has held roughly between $3,250 and $3,450 for the past ten weeks,” said David Morrison, senior market analyst at Trade Nation. 

Jackson Hole symposium

The annual Jackson Hole Symposium in August is a significant event where central bankers, policymakers, and economists converge to establish the trajectory of monetary policy.

This annual event is particularly important for gold because the Federal Reserve often uses it to indicate its policy direction for the upcoming months.

Currently, market expectations indicate an 84% probability of a 25-basis-point rate cut occurring in September.

“If Chair Jerome Powell confirms this dovish tilt, it would lower the opportunity cost of holding gold, reinforcing bullish flows,” FXstreet quoted Jasper Osita, market analyst at ACY Securities. 

Gold prices have historically reacted strongly to Fed Chair Jerome Powell's statements. 

A dovish stance from Powell could drive prices up, potentially reaching resistance levels between $3,380 and $3,400, according to Osita. Conversely, an unexpected hawkish tone might lead to a price correction, pushing gold back towards the $3,300 demand zone.

Osita added:

Technical outlook

In addition to the Jackson Hole symposium, the market will eagerly wait for the release of the minutes from Fed’s last policy meeting. 

On Monday, the dollar recovered significantly from its two-week lows against other major currencies. 

This comeback was primarily driven by position readjustments, which counteracted the prevailing risk-on sentiment in the market.

A bear cross appears to be forming on the daily chart, with the 21-day Simple Moving Average (SMA) converging on the 50-day SMA from above, according to Mehta.

Sellers maintain their optimistic outlook as long as gold stays under the $3,352 confluence zone, a point where the 21-day and 50-day SMAs intersect, Mehta said.

“The daily MACD is trundling around ‘neutral’ which means that it is of little help in forecasting gold’s next big move,” Trade Nation’s Morrison said. 

The next bullish targets are the prior week's high of $3,400 level.

Morrison said: