Dollar Struggles as Gold Holds Steady Ahead of Trump-Putin Summit

The US Dollar struggled to gain traction on Friday, keeping bullion prices firm as market participants awaited the outcome of the high-profile meeting between US President Donald Trump and Russian President Vladimir Putin. Gold (XAU/USD) traded at $3,340, up 0.17%, remaining confined within the $3,330-$3,350 range that has persisted since late Thursday’s session. Despite modest optimism surrounding the Alaska summit, traders tempered expectations, focusing instead on broader macroeconomic signals.

US economic data provided little support for the Greenback. Retail Sales for July rose 0.5% month-on-month, matching forecasts but slowing from June’s upwardly revised 0.9% gain. Industrial Production fell by 0.1% in July, missing expectations for no change, while the preliminary University of Michigan Consumer Sentiment index for August dropped to 58.6 from 61.7 in July, below the anticipated 62.0. Inflation expectations rose, with the one-year outlook jumping to 4.9% and the five-year projection climbing to 3.9%, adding pressure on the Dollar and indicating potential challenges for the Federal Reserve.

The US Dollar Index (DXY), which tracks the Greenback against six major currencies, slid 0.37% to 97.83, contributing to the extension of Gold’s recent gains. However, XAU/USD struggled to break above $3,350, as elevated US Treasury yields, particularly the 10-year yield near 4.322%, limited upward momentum. Real yields, which typically move inversely to Gold prices, also rose to 1.936%, providing additional resistance for bullion.

Looking ahead, traders will monitor a busy week for US economic data, including Flash PMI readings, the release of the latest Federal Open Market Committee (FOMC) minutes, and Fed Chair Jerome Powell’s speech at Jackson Hole. Despite Gold’s short-term rangebound behavior, the metal’s performance will remain closely linked to the US Dollar and Treasury yields, as well as developments in geopolitics.

Following these data releases, the Atlanta Fed’s GDPNow projection for Q3 remained at 2.5%, while market expectations still price a 95% probability of a 25-basis-point Fed rate cut in September, underscoring the cautious sentiment that continues to weigh on the Dollar.