Gold price extended Friday’s losses in early Monday trade as the market digests the Fed Chair’s statement during last week’s Jackson Hole Symposium. As at the time of writing, the precious metal was at $1,724.32; down by 0.72%. At its intraday low of $1,721.58, it was at its lowest level since 27th July.
What’s driving the market?
Fed’s position
Jerome Powell’s remarks during the highly anticipated Jackson Hole meeting that was held on Friday lowered bets of the US central bank easing on its aggressive policy tightening. In fact, it signalled that the Fed may continue with its interest rate hikes as dealing with high inflation remains its key priority. During the symposium, Powell noted, “Restoring price stability will likely require maintaining a restrictive policy stance for some time…The historical record cautions strongly against prematurely loosening policy.”
US dollar strength
Amid the high interest rates environment, gold price is set for its fifth consecutive month of losses. Interestingly, this is the longest stretch of losses in four years. At the same time, the US dollar hit a fresh 20-year high on Monday at $109.60. As is the case with other dollar-priced assets, gold tends to move inversely to the value of the greenback.
In his statement, Powell further indicated that another “unusually large” rate hike may be appropriate during the Fed’s September meeting. As such, investors will be keen on the incoming data; particularly jobs and inflation figures. For instance, later in the week, the US Labor Department is scheduled to release August’s nonfarm payrolls.
Additionally, the stock market will likely influence gold price movements in the new week. Heightened volatility in the stock market may boost the precious metal based on its status as a safe-haven.
