Gold, XAU / USD, US Dollar, Jackson Hole – talk points
- Gold prices at the beginning of the trading week the point is higher
- Bullion investors sharply focused on Jackson Hole
- Tool Powell signal on tapered key in XAU direction
Gold prices got off to a solid start this week, benefiting from the weaker one US dollar and a small blow to the purchase of the treasury. XAU /USD rose 1.36% on Monday, with prices now following a third weekly rise, although last week ‘s profit was marginal. Nevertheless, the yellow metal has withstood the US dollar price increase quite well. A stronger USD usually acts as a headwind for gold prices.
The positive reaction of the US dollar last week was due to increased contributions that the Federal Reserve will start to reduce the rate of purchase of its assets – this step envisages an increase in interest rates. At the same time, the increase in Covid cases due to the Delta variant sent a wave of risk aversion around the world. This was probably partly responsible for supporting gold prices, as the metal attracts shelters.
Compared to gold with a different currency base, for example Euro, highlights the flow of shelters seen last week, where XAU / EUR rose 0.91%. Bullion investors will focus on the Jackson Hole Economic Policy Symposium later this week with Federal Reserve Chairman Jerome Powell speaking. Mr Powell can send the markets a response to the balance sheet constraint that has been a priority and market-focused in recent weeks.
However, during the current Covid Delta wave, the head of the Federal Reserve may withdraw questions about the slowdown in asset purchases and postpone them until September. FOMC meeting. This is likely to promise good prices for gold, as it can be seen as a sad move that is likely to pull the US dollar lower with Treasury yields.
Last week, Robert Kaplan, president of the Dallas Federal Reserve, expressed doubts about reversing the pace of buying as the Covid pandemic slows this year’s growth. Inflation indicators are also looking over the wires this week, which usually gets a lot of attention. According to a Bloomberg study, Core PCE – which removes volatile food and energy products – will rise 3.6% in July. While markets are likely to focus on Jackson Hole, gold prices may come as a big surprise.
Golden technical forecast
Gold has risen higher after a sharp decline earlier this month. XAU / USD is now trading at the top of the declining channel after exceeding the 50-day moving average (SMA) at the beginning of the week. 78.6% of Fibonacci can support prices and may be able to allow XAU to secure access to the channel. However, a break lower will likely bring prices back to the 50-day SMA, 61.8% Fib below it.
Golden daily schedule
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– Written by Thomas Westwater, DailyFX.com analyst
Be in touch Thomas, use the comments section or below @FxWestwaterTwitter