Gold Weakens as Markets Cheer Fed’s New Monetary Policy Strategy
Gold prices are trading steady as concerns about the economic impact of the coronavirus pandemic were offset by an uptick in US Treasury
Early on Friday, gold prices are trading steady as concerns about the economic impact of the coronavirus pandemic were offset by an uptick in US Treasury yields. At the time of writing, GOLD is trading at a little above $1,940.
So far this week, gold has lost around 0.5% of its value amid expectations for the Fed to tweak its monetary policy strategy at its annual Jackson Hole symposium. On Thursday, Fed chair Jerome Powell announced measures to focus on boosting economic growth in a more inclusive manner even as he assured markets that the central bank would aim to keep inflation at 2% on average.
Powell’s statements on the changes to the monetary policy helped drive the US dollar higher, and sent gold prices down as a result. In addition, a strengthening in the US Treasury yields drove the opportunity cost of holding non-interest bearing gold higher.
Gold prices have also come under pressure over an improvement in the risk sentiment in global markets this week, with US stock markets touching new highs over consecutive sessions. However, gains in the yellow metal remain limited as economic data releases point to delay in economic recovery in the wake of the coronavirus crisis around the world.
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