Gold Prices Regain Footing After 5-day Decline; Focus Shifts to Jackson Hole Gathering
Gold prices managed to hold their ground above a five-month low on Monday, showing resilience despite a five-day decline. Investors are gearing up for a pivotal gathering of central bankers in Jackson Hole, Wyoming, where discussions about the economy and interest rates are set to shape the market outlook.
As of 0735 GMT, spot gold displayed a modest 0.1% rise, reaching $1,889.39 per ounce, while U.S. gold futures experienced a similar 0.1% increase, reaching $1,918.10.
Kelvin Wong, Senior Market Analyst at OANDA, remarked, “In order to see a more pronounced rebound, spot gold needs to surpass the 200-day moving average now at around $1,910.” This observation underscores the technical significance of this moving average as a potential turning point for gold’s price trajectory.
Last week, gold had touched its lowest level since mid-March at $1,883.70, prompted by robust economic data that increased speculation for a prolonged period of elevated U.S. interest rates. The resulting decrease in demand for non-yielding commodities like gold contributed to the recent decline.
Market attention now pivots toward the speech of U.S. Federal Reserve Chair Jerome Powell on Friday. As central bankers from around the globe convene at the annual conference in Jackson Hole, Wyoming, the focus will be on discussions about the appropriateness of higher long-term equilibrium interest rates in today’s context compared to a decade ago.
Wong noted, “If the longer-term equilibrium interest rate scenario is justified by an elevated sticky inflation environment, gold may now start to behave as a hedging instrument and attract inflows given that prices have dropped to attractive levels.”
The dynamics of Treasury bond yields and home mortgage rates are also expected to influence the Fed‘s appetite for additional interest rate hikes. Meanwhile, China’s recent decision to implement a less substantial cut to lending rates than anticipated underscored Beijing’s trend of underwhelming stimulus measures.
In the realm of exchange-traded funds, the SPDR Gold Trust, the world’s largest gold-backed ETF, reported a 0.3% increase in holdings on Friday, marking its first inflow in a month.
As for other metals, spot silver demonstrated a 0.5% gain, reaching $22.81 per ounce, while platinum maintained stability at $909.58. In contrast, palladium experienced a 0.6% dip, reaching $1,249.07.
Citi, a prominent financial institution, projects that palladium prices will remain on a structural downtrend as the market balance shifts from a deficit to a surplus over the course of the upcoming year. This forecast underscores the complex dynamics influencing various precious metals as global economic conditions continue to evolve.
