Price Performance Indicator

Gold focus :

• ICDX’s gold prices fell -1.59% in a week.
• Fed Chairman’s Speech and strong US labor market data.

Market Review

ICDX’s gold price experienced -1.59% lower than previous week as Fed Chairman Jerome Powell's speech hints at a hawkish tone, rising expectations for more interest rate hikes.

Fed Chairman Jerome Powell attended the annual global banking conference at Jackson Hole, Wyoming. Powell, in his speech, signaled to tighten policy on rising interest rates to bring inflation down to 2% despite facing recession fears. Other Fed Officials showed the same commitment as Powell as Cleveland Fed President Loretta Mester said the rates need to rise somewhere above 4% by early of next year and she doesn’t anticipate The Fed to cut the fund rate target next year.

Data released showed a still-healthy US labor market. US JOLTS Job Openings released by Bureau of Labor Statistics rose to 11.24M compared to previous 11.04M indicating strong labor demand. US Unemployment Claims reported at 232K compared to previous 237K showed less people applied for jobless benefits. A strong labor market despite high interest rates raises expectations there’s more room for The Fed to bring the rate funds higher. The policy is now at 2.25% - 2.50% level. High interest rates dull gold appeal and give pressure to gold prices.

Market View

Gold further relies on the US Federal Reserve’s rate-hike path. Powell and Fed officials haven’t shown any hints on how big they will raise the rate funds at the September meeting but The Fed Chairman remarks they will watch on the totality of incoming data and evolving outlook. Investors usually seek gold as a safe-haven asset during economic uncertainties but higher interest rates dimmed non-yielding gold demand as they shifted to financial instruments that offer more return.

WEEKLY ECONOMIC DATA & EVENTS CALENDAR

Source: ICDX Research