Chairman Powell's remarks hold the key to the dollar exchange rate and the gold market

Currently, the gold market continues to hold a steady level above $5,000. Behind this trend are safe-haven demand driven by international geopolitical tensions and the flow of global investors selling currency assets and government bonds. As market sentiment shifts and capital flows become more complex, investor focus is now centered on key events later this week.

Gold Market Above $5,000 Supported by Geopolitical Risks

The resilient environment of gold prices is not just a temporary phenomenon but is supported by structural factors. Rising geopolitical risks have increased demand for gold as a means of asset protection. At the same time, selling pressure on major currencies and fluctuations in government bond yields have further enhanced gold’s relative appeal. The interplay of these multiple factors has resulted in a stable bullish trend in the gold market.

Dollar Exchange Rate May Fluctuate Depending on Powell’s Remarks

Two major events scheduled for mid to late this week are expected to influence the market. Attention is focused on the U.S. consumer confidence statistics released late Tuesday and Federal Reserve Chair Jerome Powell’s remarks on Wednesday. The tone and content of Powell’s statements are likely to significantly influence the direction of the dollar exchange rate.

According to analyst Aaron Hill of FP Markets, market reactions could diverge into two scenarios depending on the nature of Powell’s comments. If Powell clearly refutes political pressure and emphasizes the independence of the Federal Reserve, short-term dollar buying pressure is expected to increase.

Impact of Gradual Rate Cut Signals on the Market

Conversely, if Powell’s remarks suggest the possibility of a gradual rate cut, market reactions are likely to move in the opposite direction. In this case, the dollar could face further selling pressure, potentially accelerating capital inflows into gold and commodity markets.

For investors, interpreting Powell’s statements and gauging the future stance of the Federal Reserve’s policy will be crucial in determining the next market trend.