Key Takeaways:
- New record for gold: Gold recently surged past $2,500 per ounce, briefly retreating before bouncing off the $2,470 support level.
- Fed policy in focus: Jerome Powell's speech at Jackson Hole this weekend could shape gold's direction, with potential rate cuts looming.
- Bullish momentum: UBS analysts predict gold may reach $2,600 by year-end, driven by geopolitical tensions and expected Fed rate cuts.
Powell’s Jackson Hole speech in focus
Federal Reserve Chair Jerome Powell's speech at the Jackson Hole Economic Symposium is set to be a pivotal moment for gold markets. Currently, markets are pricing in a 73.5% chance of a 25 bps rate cut in September, according to the CME FedWatch Tool. If Powell signals a dovish shift, it could further boost gold's momentum.
Powell's speech is scheduled for midnight tonight, 24th August, at 12:00 a.m. Sydney AEST and 2:00 a.m. Auckland NZST.
Geopolitical and economic factors supporting gold
Gold's 20% rise so far in 2024 is not solely due to Fed rate expectations. Geopolitical tensions, particularly in the Middle East, and substantial central bank purchases have underpinned the metal's performance. UBS expects this trend to persist, as global uncertainty prompts central banks to diversify reserves.
Technical outlook
Gold recently hit a record high of $2,531 before consolidating. After dipping to $2,470, it rebounded, maintaining a bullish outlook. UBS forecasts gold could reach $2,600 by year-end and potentially $2,700 by mid-2025. Meanwhile, RBC Capital is more cautious, projecting $2,480 by year-end. Despite short-term fluctuations, strong central bank demand and geopolitical risks continue to support a bullish trend—though Powell’s upcoming remarks could play a critical role in determining the near-term direction.
https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html