Economic policy

Gold prices end higher as investors watch Jackson Hole economic policy symposium

Gold futures shook off early losses, finding support around the $1,780 mark to end higher, as investors looked to the Jackson Hole Economic Policy Symposium for clues on the timeline of the Federal Reserve’s plans to undo COVID-era policies.

The yellow metal has seen “some profit taking but has already found support around $1,780,” Craig Erlam, senior market analyst at Oanda, said in a market update.

Investors await the annual Jackson Hole symposium on Friday where Fed Chairman Jerome Powell may indicate that the central bank will slow monthly purchases of Treasuries and mortgage-backed securities, which could influence bullion prices .

Gold “will likely remain range-bound for the next 24 hours or so, hovering around $1,775-$1,810 until we hear…Powell,” said Fawad Razaqzada, market analyst at ThinkMarkets.

“What happens next will depend on the direction of the US dollar and bond yields,” he said in a market update. “If Powell appears to be dovish, gold should have room to rise further in the near term.”

Ahead of Powell’s comments, commodity investors analyzed data on Thursday that showed weekly U.S. jobless claims for the week ending August 21 rose by 4,000 to 353,000, above average expectations. of 350,000 predicted by economists polled by Dow Jones.

Meanwhile, a second reading of US GDP in the second quarter came in at a growth rate of 6.6% from an initial reading of 6.5%.

December gold GCZ21

GC00,
-0.02%
rose $4.20, or 0.2%, to settle at $1,795.20 an ounce. It traded as low as $1,781.30 and peaked at $1,800.40. Prices fell 1% on Wednesday, the largest single-day percentage decline since Aug. 9 for the most active contract, according to FactSet data.

Silver for September delivery SIU21

SI00,

fell 22 cents, or nearly 1%, to $23.55 an ounce, after falling 0.5% on Wednesday.

In the medium term, the “key question is how central banks will adjust their respective monetary policies,” Razaqzada said. “Are they going to raise interest rates sharply to fight inflation or will this be a very gradual political normalization process?”

Razaqzada said he expects a gradual normalization of policy “as the impact of the temporary factors pushing up inflation is likely to subside in the coming months.” This should help keep the precious metals fundamentally supported, he said, adding that he would be “surprised if gold doesn’t climb and stay above $2,000 in the medium to long outlook. term”.

Markets digested comments early Thursday from Kansas City Fed President Esther George, who said the U.S. economy had reached the necessary baseline of “substantial” progress needed to begin easing its buying of assets of $120 billion per month.

“I would be ready to talk about reduction sooner rather than later”, she said in an interview with CNBC before Powell’s speech in Jackson Hole.

St. Louis Federal Reserve Chairman James Bullard, after George, also told the Business Network that “it looks like we’re coming together on a plan,” referring to a possible reduction in asset purchases. from the Fed.

“Bullard’s comments shook gold a bit, but it didn’t take long for those moves to play out,” Oanda’s Erlam said.

“He’s a well-known hawk and his comments align well with previously expressed views,” Erlam said. “It may be a sign of the nervousness of the markets before [Friday’s] main event.”

The lower-bound trading for bullion on Thursday came as the benchmark 10-year Treasury yields TMUBMUSD10Y,
1.933%
rose to 1.35%, adding to a rise to a two-week high, and competing with coupon-free gold and silver for safe-haven demand.

Meanwhile, the US dollar, as measured by the ICE US Dollar Index DXY,
-0.06%,
was up 0.2%, creating headwinds for dollar pegged assets.

Among the other metals traded at the Comex, September copper HGU21
down 0.5% to $4.25 a pound. The HGZ21 December Copper Contract,
which is now the most active contract, lost 0.4% to $4.26.

October platinum PLV21
fell 1.8% to $975.50 an ounce and September palladium PAU21
settled at $2,388.30 an ounce, down 1.7%.