Although indicators of slowing growth held gold above crucial levels on Friday, prices of gold dipped marginally as traders tended to favour the dollar ahead of additional signals on U.S. monetary policy from the Jackson Hole Symposium.
As it recovered from five-month lows touched earlier in August, gold was likewise poised for its first positive week in five. Spot prices maintained the carefully watched $1,900 per ounce level after Friday’s declines.
However, the likelihood of rising U.S. interest rates continued to cloud the picture for the yellow metal. On Friday, the dollar reached a two-month high while Treasury rates returned to multi-decade highs.
According to two Federal Reserve officials, the recent increase in bond yields helped further cool the U.S. economy and out-of-control inflation. They therefore backed it.
Gold futures expiring in December decreased 0.3% to $1,941.95 an ounce around 00:30 ET (04:30 GMT), while spot gold decreased 0.1% to $1,914.08 an ounce.
Focus on Powell’s speech in Jackson Hole
Markets were now firmly focused on the speech that Federal Reserve Chair Jerome Powell was scheduled to give at Jackson Hole later in the day.
Given that U.S. inflation remains sticky and recent data showed ongoing growth in the labour market, investors were mostly on alert due to expected hawkish signals from the Fed chair.
Two Federal Reserve officials claim that the recent rise in bond yields contributed to the further cooling of the American economy and unchecked inflation. So they supported it.
Around 00:30 ET (04:30 GMT), the price of an ounce of gold futures expiring in December fell 0.3% to $1,941.95 while the price of an ounce of physical gold fell 0.1% to $1,914.08.
Concentrate on Powell’s Jackson Hole address
Market attention was now squarely on the speech that Federal Reserve Chair Jerome Powell would deliver later that day in Jackson Hole.
Investors were generally on edge owing to anticipated hawkish signals from the Fed chair given that U.S. inflation remains sticky and recent statistics showed steady strength in the employment market.
Futures for copper decreased 0.3% to $3.7592 a pound and were expected to increase 1.4% this week. However, futures were trading much below the week-ago highs.
The spotlight is mainly on comparable data from China, which is due next week, after disappointing purchasing managers’ index prints from the U.S., euro zone, and Japan this week.
As China battles sluggish manufacturing activity and an impending real estate crisis, markets will be keeping an eye on whether economic conditions in the world’s largest copper importer improved through August.