Gold Trading Near Two-Week High as Markets Focus on Dovish Fed
Arslan Butt • 1 min read
On the last day of August, gold prices are trading bullish close to the highest level in almost two weeks, supported by a more dovish than expected Fed and a resulting weakness in the US dollar. At the time of writing, GOLD is trading at a little above $1,970.
At last week’s Jackson Hole symposium, Fed chair Jerome Powell alluded to the central bank’s plans to hold interest rates at low levels for a longer period of time, with a focus on supporting economic recovery in the US – an outlook that increases the safe haven appeal of the yellow metal. However, despite the current bullishness, gold has lost around 0.2% of its value so far this month.
Even as the coronavirus pandemic rages on and weighs on the sentiment in global financial markets, gold prices have been driven lower as a result of an uptick in the risk appetite in markets. This has driven a rally in global stock markets of late, turning investors away from the safety of the precious metal and towards riskier assets.
On Monday, gold prices have also been supported by weak economic data releases during the Asian session. While China’s factory activity grew at a slower than expected pace in August, Japan saw retail sales decline for the fifth consecutive month – revealing the economic fallout from the pandemic.