Traders "hold their breath" waiting for the Powell Jackson Hole meeting, gold hits the largest single-day decline this month
Gold prices fell on Thursday, marking the largest single-day decline this month, mainly due to the strength of the US dollar and rising bond yields. Powell's speech at the Jackson Hole meeting is closely watched by the market for its potential impact on expectations of a Fed rate cut in September. Gold futures for December delivery fell by 1.2%, closing at $2,516.7 per ounce. Despite this, the fundamentals remain bullish, and it is still recommended to buy on dips
According to the Wisdom Financial APP, on Thursday, the price of gold fell, mainly affected by the strengthening of the US dollar and the rise in bond yields, marking the largest one-day drop in gold in a month. Just two days ago, the price of gold hit a new all-time high.
The decline in gold prices comes just before Federal Reserve Chairman Powell's speech on Friday. Kitco.com senior analyst Jim Wyckoff stated, "In recent years, central bank officials have made market-moving speeches at the Jackson Hole Economic Symposium in Wyoming." Powell's speech may provide some guidance on the market's expectations for the size of the Fed rate cut in September.
On Thursday, the price of December gold futures fell by $30.8, or 1.2%, to close at $2,516.7 per ounce, having briefly dropped to $2,506.4. According to Dow Jones market data, the price calculated on the most active contract hit its lowest point since August 15 and recorded the largest single-day drop since July 25.
On Tuesday, the price of gold hit a historic high, closing at $2,550.6, marking the 30th time this year that a new all-time high has been set.
Despite this, Michael Armbruster, managing partner at Altavest, stated, "The fundamentals of the gold bull market remain strong, and we believe it is possible to go long or add to existing long positions on further pullbacks." He also pointed out, "Foreign central bank buying and the gold-backed currencies of the BRICS countries are very bullish fundamental factors." He added, "Data measuring the flow of gold exchange-traded funds (ETFs) shows that Western market demand for gold has only recently become active."
In Thursday's trading, the ICE US Dollar Index rose by 0.5% to 101.51. According to FactSet data, on Wednesday, the index had fallen slightly below 101. At the same time, the yield on the 10-year US Treasury rose from 3.778% on Wednesday to 3.859%.
Rania Gule, senior market analyst at XS.com, stated that expectations of a possible Fed rate cut may limit the rebound of the US dollar and provide support for the price of gold.
Data from Wednesday showed that US job growth was weaker than initially estimated up to March this year, while minutes from the Fed's July meeting indicated that several officials were inclined to cut rates immediately. Gule said, "This further strengthens expectations that the Fed will begin a monetary easing cycle in September, which will be positive for gold."