The price of gold increased by 0.6% after falling by almost 1% yesterday. The precious metal is supported by the weakening of the US currency, as well as expectations of a speech by Fed Chairman Jerome Powell, which may clarify the trajectory of interest rates. However, since the beginning of the week, gold has fallen by 0.2%, and is preparing to record the first weekly decline in the last 4 weeks.
Meanwhile, experts warn that the recent price correction is likely to be temporary, as fundamental factors still seem favorable for the precious metal.
The key event of today's session will be Powell's speech at the annual central banking conference in Jackson Hole at 14:00 GMT. Investors are hoping to get information from Powell about how recent data, especially labor market statistics, have changed his assessment of the prospects for the U.S. economy, as well as more clarity about the scale of interest rate cuts this year. According to the CME FedWatch Tool, markets see a 24.5% probability of a 0.5% rate cut in September (down from 25% the week before), and a 75.5% probability of a 0.25% rate cut (up from 75.0% the week before), with a 1% rate cut expected by the end of the year. A low interest rate environment tends to boost non-yielding bullion's appeal.