Date: August 24
Gold prices surged to their highest levels in two weeks on Thursday, benefiting from a decline in the U.S. dollar and Treasury yields. This rally is driven by investors’ anticipation of interest rate signals that central bankers might offer during the Jackson Hole meeting.
As of 0810 GMT, spot gold rose by 0.3% to reach $1,920 per ounce, marking its highest point since August 10. U.S. gold futures, on the other hand, remained flat at $1,948.90.
The focus of the market is currently on the Federal Reserve’s annual symposium in Jackson Hole, Wyoming, which is scheduled to run from August 24 to 26. Investors are keenly awaiting Federal Reserve Chair Jerome Powell’s speech on Friday, hoping for insights into the potential trajectory of interest rates.
Rising U.S. interest rates tend to increase the opportunity cost of holding gold, which does not yield any interest.
The retreat in the U.S. dollar and Treasury yields followed softer-than-expected global economic data. The weaker PMI survey results have reduced the possibility of further rate hikes in the U.S. and Europe, which is viewed positively for gold prices and exerts downward pressure on U.S. Treasury yields, according to Baden Moore, head of carbon and commodity strategy at National Australia Bank.
Furthermore, concerns about economic slowdowns are arising from various regions. The U.S. business activity’s sluggish growth in August and Britain’s slowing economy, which might be heading for a recession, are contributing to these worries.
Traders are also positioning themselves for the possibility that the European Central Bank might pause rate hikes in September due to sharp contractions in business activity indicating a deepening economic struggle.
Technical analysis suggests that safe-haven gold could potentially extend its gains within the range of $1,928 to $1,934 per ounce, according to Reuters technical analyst Wang Tao.
While gold rose, spot silver declined by 0.6% to $24.19 per ounce, platinum edged up by 0.1% to $930.38, and palladium dropped by 0.7% to $1,265.47.
For silver, market observers are watching immediate resistance at $24.50, with the potential to test its year-to-date high of around $26 if it manages to surpass this level, noted Yeap Jun Rong, a market strategist at IG.
