Gold rises 1% due to dollar weakness and anticipation of signals from the Fed in Jackson Hole
Gold prices rose by about 1% during the end of trading on Wednesday, August 20, affected by a decline in the value of the US dollar, at a time when investors are eagerly awaiting the annual Federal Reserve symposium in Jackson Hole scheduled for this week, seeking hints about the monetary policy path.
Gold prices in spot transactions increased by 0.9% to $3344.37 per ounce, after reaching their lowest levels since August 1. This was followed by US gold futures, which also rose by 0.9% at settlement to reach $3388.50. This rise was supported by the decline in the value of the US currency, which reduces the cost of purchasing the yellow metal for holders of other currencies.
In a related development, the minutes released on Wednesday from the last meeting of the Federal Open Market Committee revealed an internal division, showing that the two dissenting members of the council's decision to maintain interest rates last month _Michelle Bowman, Vice Chair of the Supervisory Board, and Christopher Waller, Federal Reserve Governor_ "appeared to be the only ones calling for a rate cut." This meeting came just two days before the release of weaker-than-expected US jobs data, which seemed to justify their cautious stance.
However, the impact of these minutes on the market appeared to be limited, as independent metals trader, Tai Wong, commented: "Traders are ignoring this, considering it old news, as it was released before the shocking employment report," according to Reuters.
Market attention is now fully shifting towards the anticipated speech of Federal Reserve Chairman Jerome Powell at the Jackson Hole Economic Forum on Friday. Bob Haberkorn, a market strategist at RJO Futures, expressed his expectations, commenting: "If Powell is pessimistic, this will signal a rise in gold prices, as it does not yield interest. It will need to break the $3350 per ounce level, then re-test the $3400 per ounce level if (Powell) is pessimistic."
Regarding expectations, the chances of a rate cut remain high, as markets currently expect an 83% probability of a 25 basis point cut at the Fed's meeting next month, according to the FedWatch tool from CME. Goldman Sachs also maintained its forecast that gold prices will reach $4000 per ounce by mid-2026, based on strong demand from central banks, ETF inflows supported by rate cuts, and a 30% likelihood of an economic recession in the US over the next 12 months.
In separate news, US President Donald Trump called for Federal Reserve Governor Lisa Cook to resign over mortgage-related allegations.
As for other precious metals, silver recorded a rise of 1.1% in spot transactions to $37.78 per ounce, while platinum jumped 2.1% to $1333.43, while palladium remained stable at $1115.15.
