On Thursday, August 22, the price of gold fell by more than 1%, closing at $2,483.29 per ounce. Prior to the Jackson Hole Symposium, gold experienced a significant profit-taking adjustment due to the rebound of the US dollar and the rise in bond yields.
Data released by the US Bureau of Labor Statistics (BLS) on Thursday showed that initial claims for unemployment benefits in the US for the week of August 17 were higher than expected and the previous reading. However, the job market is still on a moderate downward trend. In addition, data from S&P Global showed that despite the consecutive second month of contraction in US manufacturing activity, business activity remains robust. The US August Manufacturing PMI contracted again to 48.0; the Services PMI rose to 55.2, exceeding expectations. Following the release of US data, US Treasury yields rose, boosting the US dollar and pressuring gold. Investors are preparing for Fed Chair Powell's speech at Jackson Hole and, as a precaution, traders are adjusting their long positions in gold. There are numerous opinions on Fed Chair Powell's speech on economic outlook at the Jackson Hole Symposium. Some institutions believe Powell's speech will pave the way for a Fed rate cut in September. Powell may counter market expectations of a 50 basis point rate cut at future meetings and indicate a more moderate policy easing pace. In this scenario, the US dollar and US Treasury yields may rise, further suppressing gold and continuing the pullback. Analysis from Bank of America Merrill Lynch suggests that Powell's speech will focus on the "stability of the labor market." A firmer stance on preventing labor market weakness could be seen as an important policy signal, potentially stimulating gold to reach new highs. Goldman Sachs' view indicates that the market may receive signals of "rate cut confidence" and "data dependency." Powell's information and off-site interviews are expected to be similar to what has been heard in recent weeks, suggesting that the Fed is nearing a rate cut, but the extent of easing will depend on upcoming data. This could lead to gold entering a consolidation phase. The final outcome will depend on the information Powell releases later this evening.
Source: E-huitong
From a technical perspective, despite gold falling below $2,500 per ounce, the upward trend of gold remains intact, with various technical indicators showing no signs of a reversal, indicating that the recent uptrend in gold has not exhausted yet. As gold has frequently reached historical record highs, it is currently mainly about guarding against the risk of a downward adjustment. On the downside, if the daily closing price of gold falls below $2,483 per ounce, sellers may drive the price down towards the high point of May 20 at $2,450 per ounce. Once below $2,450 per ounce, the extent of gold's pullback will deepen. For gold to continue reaching new highs, it will need to await significant bullish news to maintain its upward momentum.
Wang Gang, Bank of China Guangdong Branch
For personal views only, not representative of the views of the organization.