Gold Updates: 25/8/2023

Gold Updates: 25/8/2023

Gold concluded lower on Friday due to a strengthening dollar and sustained high treasury yields, driven by remarks from Federal Reserve chair Jerome Powell during the Economic Policy Symposium in Jackson Hole, Wyoming. Powell’s speech did not suggest an imminent decrease in interest rates.

The December delivery of gold recorded a decrease of US$7.20, settling at US$1,939.90 per ounce.

In his eagerly awaited address, Powell highlighted that the US economy isn’t cooling as initially anticipated. He indicated that if inflation persists above the Federal Reserve’s 2% target, there might be a need for interest rates to rise.

Read more: Economic Concerns Drive Surge in China’s Gold Premiums

Powell stated, “We are closely monitoring indications that the economy might not be cooling in line with expectations. Throughout this year, GDP growth has exceeded both projections and its long-term average, with consumer spending showing notable strength. Moreover, the housing sector, after a significant 18-month slowdown, is displaying signs of resurgence. If the evidence continues to support growth consistently above expectations, this could jeopardize progress on controlling inflation and potentially necessitate further tightening of monetary policy.”

Following Powell’s speech, the dollar gained ground, with the ICE dollar index rising by 0.16 points to reach 104.14.

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Meanwhile, treasury yields maintained levels close to those not seen since 2006. The yield on the US two-year note rose by 4.4 basis points to 5.058%, while the 10-year note saw a marginal increase of 0.1 basis points, reaching 4.239%.

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