Fundamental Forecast for Gold: Neutral
Gold prices were higher last week with the precious metal up 0.48% to trade at 1288 ahead of the New York Close on Friday. Price action last week remained uninspiring until Friday’s Jackson Hole event fueled a brief surge in volatility. The gains come on the back of persistent weakness in the greenback with the DXY trading just above the yearly lows into the close of the week.
Remarks made by Federal Reserve Chair Janet Yellen at the annual Jackson Hole Economic Symposium offered little guidance on the future of monetary policy. Her comments continued to reinforce the notion that the central bank is in no rush to normalize. In fact, Dallas Fed Preside Robert Kaplan went as far as to note that the terminal Fed Funds rate may be closer to / as low as 2.5%. The result saw the dollar come under significant pressure, to the benefit of bullion prices.
Looking ahead to this week, traders will be awaiting the release of the U.S. August Non-Farm Payrolls report with consensus estimates calling for a print of 180k as the headline unemployment rate holds at 4.3%. With the labor markets more-or-less at ‘full’ employment, Fed officials have continued to be plagued by slow inflation – look for the wage inflation figures to drive broader dollar price action on the release. For gold, while the underlying fundamentals remain constructive, prices are approaching the yearly highs and put the immediate advance at risk heading into 1300.
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