Gold prices showed unexpected strength on Monday, despite Jerome Powell’s hawkish remarks on interest rates. Low Treasury yields and a stable US dollar helped to support this.

Jerome Powell, US Federal Reserve head, hinted at potential rate increases at Jackson Hole meeting, highlighting the US economy’s strength. However, traders had already considered Powell’s hawkish stance, and no market turmoil occurred following his speech.

Gold’s future direction remains uncertain due to the potential early rate hike in November and the U.S. economy’s resilience. In order to control inflation, Loretta Mester of the Cleveland Federal Reserve Bank suggests possible interest rate increases followed by stability.

The U.S. non-farm payroll report on Friday is expected to provide economic insights, attracting investors. Gold bullishness is diminishing, with COMEX gold speculators cutting net long positions in the week ending August 22.

Gold’s short-term prognosis is gloomy due to upcoming economic data and rate increases. Non-yielding assets like gold often decline when interest rates rise. However, a significant short-covering bounce is possible due to Powell’s Friday comments already factored into market prices.

By admin

Leave a Reply

Your email address will not be published. Required fields are marked *