On Friday morning (August 23) in the Asian market, spot gold fluctuated narrowly, under pressure below the 2500 mark, and is currently trading around $2485.67 per ounce. Gold prices fell more than 1% on Thursday, falling below the 2500 threshold and closing at $2484.57 per ounce, pressured by the rebound of the dollar and the rise in treasury bond bond yields, while traders expected Fed Chairman Powell's speech at the Jackson Hole annual meeting to provide more clues about interest rate cuts.

The US dollar index rebounded from a 13 month low on Thursday, and Federal Reserve Chairman Powell will give a speech on Friday. People believe that the recent weakness of the US dollar has gone too far.

Due to concerns about economic weakness and expectations of the Federal Reserve approaching a rate cut, the US dollar has recently fallen. But the degree of weakness and whether it will push the Federal Reserve to cut interest rates by 25 basis points or 50 basis points at its September meeting remains a question.

After the July employment report showed lower than expected job growth and an unexpected increase in unemployment, the probability of a 50 basis point or more interest rate cut has increased. However, as other data shows an improvement in economic growth, this possibility has decreased.

Brad Bechtel, Global Head of Foreign Exchange at Furui, said, "The US dollar has been under a lot of pressure recently, but I think it has reached a fairly oversold state

Bechtel said, "We have slightly retreated from the emergency state after the release of non farm payroll data, but the pricing of the US dollar seems to still be in that emergency state

According to the CME FedWatch Tool, traders currently believe that the probability of a 50 basis point rate cut next month is 25%, lower than Wednesday's 38%, and the probability of a 25 basis point rate cut is 75%.

Phillip Streible, Chief Market Strategist at Blue Line Futures, said, 'We have seen two-year yields rise and the US dollar index rise... Gold's performance over the past three trading days has been incredible. It has set a new historical high, so traders naturally take profits from this trend.'.

The market focus now shifts to Powell's speech at the Jackson Hole Economic Symposium on Friday. On Wednesday, the minutes of the Federal Reserve's meeting on July 30-31 showed that officials strongly favored a rate cut next month.

At least two Federal Reserve officials expressed support for a rate cut at next month's policy meeting on Thursday.

Most securities firms predict that the Federal Reserve will cut interest rates by 25 basis points in September, while JPMorgan Chase, Citigroup, and Wells Fargo are expected to cut interest rates by 50 basis points.

However, Powell may not be willing to provide too many details, as the August employment and inflation data will be released after his speech and before the September 17-18 meeting.

The minutes of the Federal Reserve's July 30-31 meeting released on Wednesday showed that the "vast majority" of decision-makers indicated a possible interest rate cut in September.

Philadelphia Fed President Huck said on Thursday that he would agree to a September rate cut as long as the data performance meets his expectations, and Boston Fed President Collins also hinted that he may support a rate cut.

Thursday's data showed that the number of initial jobless claims in the United States increased last week, but this level still suggests that the trend of the labor market gradually cooling down remains unchanged.

The day before, the revised data for the full year ending in March showed that the number of new jobs added in the United States was far less than initially reported.

Europe and the UK are also facing weak growth prospects and central bank interest rate cuts, and Bechtel said that the weakness of the US dollar relative to these currencies may have gone too far.

At present, there is no real reason for the euro to significantly outperform. I think the situation in the UK is similar, "he said. Ultimately, the situation of the Federal Reserve, the European Central Bank, and the Bank of England in terms of easing cycles is generally similar

The US dollar index rose 0.38% at the end of Thursday trading, closing at 101.50. The index hit its lowest level since December 28th at 100.92 on Wednesday.

The yield of US treasury bond bonds rebounded from the two-week low hit on the previous trading day on Thursday, in line with the trend of the European bond market, as investors took a break to buy treasury bond before Federal Reserve Chairman Powell made a speech at the central bank event held in Jackson Hole, Wyoming, on Friday.

However, analysts said that although the yield increased on Thursday, the downward trend has not changed.

The number of initial jobless claims and the S&P Global Business Activity Index continue to show an economic slowdown, supporting the expectation that the Federal Reserve will start cutting interest rates next month. However, these data, including recent economic reports, do not indicate that a recession is imminent.

I think Powell and what he should have said have been well digested because the meeting minutes we received on Wednesday were quite dovish. Powell needs to make a very hawkish statement to reverse market sentiment, which is unlikely, "said Stan Shipley, a fixed income strategist at Evercore ISI in New York." Nevertheless, the economic data is not bad. The inflation rate is low, and the Federal Reserve will start easing multiple times in the next two years. We believe they will cut interest rates three times this year and several times next year

The yield on the 10-year US treasury bond bond rose 8.6 basis points to 3.861% on Thursday. This also provides reasons for the correction of gold prices.

In addition to Powell's speech, investors need to continue to pay attention to the relevant news of the geographical situation, the annual total number of new housing sales in the United States after the quarterly adjustment in July and other Fed officials' speeches.

Data on initial jobless claims and corporate activity in the United States indicate that the economy is still gradually cooling down

The number of initial jobless claims in the United States increased last week, but seemed to stabilize at a level consistent with the gradual cooling of the labor market, which should create conditions for the Federal Reserve to initiate interest rate cuts next month.

Due to the weakened ability of companies to raise prices, overall business activity in the United States has slowed down this month, further proving that the economy is slowing down and inflation is declining. Federal Reserve officials should focus more on the job market.

Due to the widespread expectation of interest rate cuts next month, housing loan interest rates have begun to decline, which has helped drive the rebound in existing home sales last month beyond expectations.

The US Department of Labor announced on Thursday that the number of initial jobless claims increased by 10000 in the week ending August 17, to 232000 seasonally adjusted. Economists previously predicted that the number of applicants in the past week would be 230000.

The latest data should continue to alleviate people's concerns about the rapid deterioration of the labor market, which first appeared after a significant slowdown in employment growth in July, when the unemployment rate also rose to a post pandemic high of 4.3%.

Nancy Vanden Houten, Chief US Economist at Oxford Economics, said in a client report that in fact, the latest application data covers the survey week of the Department of Labor's employment report this month, and the flattening of the new application data indicates that "the unemployment rate will slightly decrease in August".

She said, "The number of people applying for unemployment benefits is stabilizing on a trend basis, which is consistent with our view that although the labor market is weakening, it is not weak enough to require a rate cut of more than 25 basis points at the Federal Reserve's September meeting

Federal Reserve officials have stated that they are closely monitoring the labor market and are aware that waiting too long for a rate cut could cause serious harm.

However, the layoff rate is still at a historical low, and the main reason for the slowdown in the labor market is that companies have reduced their recruitment scale, as well as the surge in labor supply caused by immigration.

During the week ending August 10th, the number of people applying for unemployment benefits, which serves as a barometer of employment, increased by 4000, to 1.863 million after seasonal adjustment.

The business activity report also shows that the economy is cooling down in an orderly manner. S&P Global announced on Thursday that the US Composite Purchasing Managers' Index (PMI) output index, which tracks the manufacturing and service industries, fell to 54.1 this month, a four month low but still at a healthy level of the highest measured in the past two years. The final value for July was 54.3.

A reading above 50 indicates that the private sector has expanded. The slight rebound in the service industry was overshadowed by the slowdown in the manufacturing industry.

The average price increase rate of goods and services is the slowest since January, which echoes reports from businesses that customers are resisting high prices by bargaining, reducing procurement scale, and purchasing lower priced alternatives

The Composite Purchasing Managers' Index remains almost unchanged, which means that with the arrival of the third quarter, economic activity remains robust. The annualized growth rate of gross domestic product in the second quarter was 2.8%, higher than the 1.4% in the first quarter.

The steady growth trend in August indicates that the annualized growth rate of gross domestic product in the third quarter will exceed 2%, which will help alleviate concerns about the recent economic recession, "said Chris Williamson, Chief Business Economist at S&P Global Markets Intelligence

The indicator for new orders received by private enterprises in the survey increased slightly from 52.2 in July to 52.3. The input price index paid by enterprises remains unchanged at 58.0, but the survey shows that the fee price index has dropped from 53.1 in July to 52.8.

At the same time, the growth rate of existing home sales in the United States exceeded expectations in July, reversing four consecutive months of decline due to improved supply and lower mortgage rates, bringing hope for a rebound in economic activity in the coming months.

The National Association of Realtors (NAR) announced on Thursday that existing home sales increased by 1.3% last month, with a seasonally adjusted annual rate of 3.95 million units. Economists surveyed by Reuters previously predicted that existing home sales would rise to 3.93 million units.

Existing home sales account for a large proportion of housing sales in the United States, with a year-on-year decrease of 2.5% in July. The median price of existing houses increased by 4.2% year-on-year, reaching $422600. Last month's inventory increased by 0.8% to 1.33 million sets, while supply surged by 19.8% compared to a year ago.

Federal Reserve's Hark hopes to cut interest rates in a slow and orderly manner

Philadelphia Fed President Patrick Harker said on Thursday that he would support a rate cut in September as long as the data performance meets his expectations.

During his attendance at the annual symposium of the Kansas City Fed in Jackson Hole, Wyoming, Huck said in an interview with Reuters that on the issue of the upcoming reduction in short-term borrowing costs, "for me, unless there are any unexpected data from now until then, I think we need to initiate the (rate cut) process.

Huck said that the strength of any action is not as important as the overall rate cut, and he pointed out, "I think slow and orderly rate cuts are the right approach. He said that the business people he has been in contact with are calling for predictable action and do not want the interest rate cuts to be as aggressive as when they were raised from near zero levels in the spring of 2022.

Huck said that the job market has clearly softened, but he believes that the recruitment situation is in the process of normalization. He downplayed the significance of the recent surge in unemployment rate from a low of 3.4% at the beginning of last year to the current level of 4.3%, stating, 'We believe that given the long-term potential of the job market, the unemployment rate will peak at some level below 5%, which is our forecast.'.

Although Huck pointed out that the inflation rate has fallen and expressed support for interest rate cuts, he acknowledged that it will still take time for price pressure to return to the 2% target. He said, "We will definitely move in this direction, and it may take at least another year or more

Huck pointed out that the prospect of relaxing monetary policy can help revive the stagnant real estate market. With the recovery of activity, housing pressure should be alleviated, and housing pressure has always been the main driving force of rising prices.

Huck also stated that he will continue to monitor the risks in the commercial real estate sector, but he does not believe that the issues in this area pose a widespread threat to the financial industry so far.

Federal Reserve's Collins believes inflation can be reduced without triggering a recession

Boston Fed President Susan Collins stated on Thursday that she believes the Federal Reserve Board (Fed/FED) can reduce inflation without triggering an economic recession and hinted at support for interest rate cuts starting next month.

Collins said in an interview with Reuters at the Jackson Hole Economic Symposium, "I believe there is a clear path to achieving our goals without unnecessary recession, while the labor market remains healthy. While we continue to lower inflation, it is very important to maintain a healthy labor market, which is also one of the reasons why I think it seems like the time has come to relax policies

Collins is unwilling to comment on whether the Federal Reserve will initiate a loose cycle by cutting interest rates by 50 basis points instead of the more common 25 basis points, but she emphasizes the health of the labor market and calls for a "gradual and orderly" adjustment of policies, implying her inclination towards smaller reductions in borrowing costs.

She said that one of the risks facing the outlook is that if the view that the US labor market is cooling down too quickly takes root, it may fall into a "self fulfilling" spiral of economic weakness.

It is important to discuss the series of data we have seen that indicate the overall health of the labor market, "she pointed out. Job vacancies have decreased, and the decrease in monthly employment growth is mainly due to a slowdown in recruitment rather than an increase in layoffs. The 4.3% unemployment rate is still very low.

The orderly rebalancing we have seen is encouraging and overall very helpful. I believe that it will still be appropriate to re-examine our policy stance in a gradual manner over time, "she said. We are in a favorable position... while we continue to reduce inflation, it is very important to maintain a healthy labor market

Russia and Ukraine report new developments on the battlefield, with the Russian military pushing for strategic cities and Ukrainians rushing to flee

Both Russia and Ukraine reported new battlefield developments on Thursday, with Kiev cheering for the capture of another Russian village, but as Russian forces advanced towards the eastern Ukrainian city of Pokrovsk, hundreds of Ukrainians scrambled to flee the area.

Ukrainian President Zelensky inspected the border where Ukrainian troops entered the western Kursk region of Russia and announced the capture of a new village, but did not disclose which village it was; He also stated that this invasion would help reduce Russia's shelling of the Sumy region in the northeast.

Russian authorities claim that a Russian ferry sank after Ukraine attacked the port of Kafka in southern Russia, which supplies fuel to the occupied Crimean Peninsula. Ukraine, on the other hand, stated that it launched a drone strike on an air base in southern Russia and carried out a surprise attack about 240 kilometers away from the advancing location in the Kursk region.

After returning to Kiev, Zelensky said that Ukraine's latest military action is part of efforts to end the war on Ukrainian rather than Russian terms.

He said that in order to force the Russian military to withdraw from Ukrainian territory, the Ukrainian army should "create as many problems as possible" on Russian territory.

Moscow stated that the Russian military has taken control of the village of Mezov in the Donetsk region of eastern Ukraine and repelled Ukrainian attempts to infiltrate its border in another area.

The Ukrainian authorities stated that the Russian military is currently only 10 kilometers away from the important transportation hub of eastern Ukraine, Pokrovsk. Therefore, the local authorities have started evacuating elderly and young residents this week.

Everyone is in panic, everyone is running away, "Liudmyla Sydorenko told Reuters. I walked outside and was shocked: people were holding cardboard boxes and evacuating on a large scale. We didn't want to leave, but we had to. We thought we could stay here. But it was very difficult

Moscow's capture of Pokrovsk, located at the intersection of highways and railways, will provide it with the option to advance in a new direction and cut off Ukrainian supply lines in the Donetsk region.

Ukrainians are preparing to celebrate the 33rd anniversary of their independence from the Soviet Union on Saturday. The US Embassy in Kiev has stated that the risk of Russian missile and drone attacks across Ukraine will increase in the coming days as Independence Day approaches.

Daily chart of spot gold