Ahead of the crucial event today, gold managed to restore its gains, the USD was not so lucky
On Thursday, all markets’ attention is focused on the Jackson Hole Symposium that will be held on 27-28 August. Traders are eager to watch the Fed’s head Jerome Powell’s speech at 13:10 GMT. However, the US Dollar was not able to benefit from this wait-and-see mode and fell below the 93.00 mark. On the other hand, gold managed to find decent support in the $1,910 region and staged a strong recovery to the $1,950 area. Now it comfortably sits at $1,943.
Today, markets keep on maintaining their cautious mood ahead of the key event. Investors will try to find some hints in Powell’s speech about average inflation targeting in the framework of a reviewed monetary policy. AIT presumes that the FOMC will return to a higher inflation range of 2-2.5% when the economy is or near full employment. If this information is confirmed, the sentiment will turn bullish, which will prop up risky assets and put pressure on the safe-havens such as the USD and gold. However, while traders refrain from placing aggressive bets, gold strengthens its positions.
Another factor that helps the non-yielding metal to rise is the warnings about strong and extremely dangerous hurricane Laura. Currently classified as the Category 4 storm, Laura is coming to the LA coastal area and may strengthen further. Meanwhile, the market-moving COVID-19 headlines are far from being optimistic – Italy is suffering again from the rise in the number of patients and reported earlier the highest coronavirus cases since May, which may be worrying. This pessimistic news backs up risk-off making the yellow metal gain ground.
Moreover, the US Defense secretary accused China of breaking its promises to abide by the international laws saying that China obstructed global efforts to curb coronavirus pandemic. These comments make it evident that the ongoing tensions between the two countries are growing, which pressure traders’ mood and play into gold’s hands.
From the technical point of view, gold trades in a tight range with the support marked at $1940-35, $1932, and $1923 while the resistance is seen at $1952 and $1956.