The gold price broke through $3,400 yesterday to trade at the highest point since the Jackson Hole symposium, as the dollar weakened further and geopolitical risk helped provide support for the price.
“In yesterday’s session, gold broke above the psychological threshold of $3,400/oz, marking a new high since the Jackson Hole symposium,” explained Linh Tran, Market Analyst at XS.com.
“The main driver remains expectations that the Fed will soon begin its rate-cutting cycle in September, after Chair Jerome Powell delivered a “cautiously dovish” message, acknowledging rising risks in the labor market while noting signs of easing inflation. A weaker U.S. dollar and falling bond yields directly supported the rally in the precious metal.”
Gold was trading at $3,410 at the time of writing.
Ultimately, the Federal Reserve will be driven by what’s happening in the underlying economy, making each data point all the more important for the price of gold in the coming weeks.
“The fate of the gold market—and whether range highs are tested next week—ultimately rests on upcoming US data,” said Chris Weston Head of Research at Pepperstone.
“Gold will take its steer from the USD and real yields, but it’s the data that will decide its path. If the numbers flag economic fragility and the perception grows that the Fed is behind the curve, gold could kick higher as a hedge, with new highs on the horizon.”