Spot gold fell sharply on Thursday, declining over 1% and closing below the $2,500 per ounce level, as investors braced for an upcoming speech by Federal Reserve Chairman Jerome Powell. The precious metal ended the session down by $27.45, or 1.09%, at $2,484.74 per ounce, having touched an intraday low of $2,470.82.
FXStreet analyst Christian Borjon Valencia attributed the decline to rising U.S. Treasury yields, which increased after the release of U.S. economic data. The price of gold slipped below its previous high of $2,483 per ounce during Thursday’s trading.
Data from the U.S. Bureau of Labor Statistics showed that initial jobless claims for the week of August 17 were higher than expected. Despite a second consecutive month of contraction in U.S. manufacturing activity, as indicated by the S&P Global manufacturing PMI, the services PMI rose to 55.2, exceeding expectations.
Valencia noted that the rise in U.S. Treasury yields, particularly the 10-year benchmark, which increased by 6.5 basis points to 3.865%, boosted the U.S. dollar and exerted downward pressure on gold. The dollar index (DXY) rose 0.39% to 101.52.
The decline in gold prices may have been driven by profit-taking ahead of Powell’s anticipated speech, Valencia suggested. Investors were also reacting to the minutes from the latest Federal Open Market Committee (FOMC) meeting, which indicated that most participants favored easing policy at the September meeting if economic data aligns with expectations.
As investors await Powell’s speech at the Jackson Hole Economic Symposium on Friday, there is speculation that he may set the stage for monetary policy for the rest of 2024. Analysts suggest that Powell’s comments could influence expectations for future rate cuts, potentially impacting both the U.S. dollar and Treasury yields, and thereby affecting gold prices.
Valencia pointed out that while the broader uptrend in gold remains intact, the recent drop below $2,500 per ounce suggests sellers currently have the upper hand in the short term. A close below $2,483 per ounce could trigger further declines, with potential support levels at $2,450, $2,398, and $2,377 per ounce.
Conversely, if gold prices recover above $2,500 per ounce, another attempt to reach the all-time high of $2,531 per ounce could be on the horizon. 
