Gold Prices
The gold price was heading lower for a third-straight day and the precious metal could come under further pressure from the FED’s Jackson Hole symposium.
The annual Jackson Hole symposium is a two-day event in Jackson Hole, Wyoming and is hosted by the Kansas City branch of the Federal Reserve. The event sees Fed officials and finance ministers from around the world meeting to discuss economic policy. The market always closely-follows the statements coming from the event, but this year could see additional volatility due to the economic backdrop.
The Federal Reserve has always been wary of higher gold prices and the recent rally is based on a belief that the Federal Reserve’s balance sheet is a runaway train and that inflation will follow suit eventually. This could see an attempt to take the steam out of gold. Last week’s FOMC minutes were more dovish than usual and are possibly a sign that Fed Chair Jerome Powell wants to calm the market’s fears over further aggressive policy action.
This year’s topic for discussion amongst the delegates is “Navigating the Decade Ahead: implications for Monetary Policy”. The severity and long-term implications of the Coronavirus will be a key feature of the discussion and this could give investors some clarity over the Federal Reserve’s longer-term path for its balance sheet and interest rate policy expectations.
The gold price is currently trading around $1927 and the next big support level is at the 12th August low at $1860. A move here would also breach an uptrend line and could see the market retreat to the next trendline support around $1840.
The recent price action marks a failure at $2000 on 18th August, followed by a failure at $1950 so the next move is likely lower. However, if the Jackson Hole comments support a stronger gold price, the $1950 level would be remove the bearish bias.