Gold’s Modest Rise Checked by Dollar Dynamics and Global Market Influences
GOLD continues its modest recovery from Friday’s dip to the $1,904-$1,903 range, nudging slightly upward during the Asian trading session to start the week. However, the metal’s upward trajectory seems hesitant. The XAU/USD is hovering around $1,916, marking a marginal gain of less than 0.10% for the day, still below the two-week peak achieved last Thursday.
The US Dollar starts the week with a somewhat subdued tone, pulling back from its early June heights. This pullback is advantageous for GOLD , as commodities priced in USD, like XAU/USD, typically benefit from a weaker Greenback. Nevertheless, the potential for more rigorous monetary policies from the Federal Reserve keeps traders cautious, restraining them from heavily investing in non-yielding assets like Gold.
In his recent speech at the Jackson Hole Symposium, Jerome Powell, the Federal Reserve Chair, highlighted the possibility of additional interest rate hikes to mitigate persistent inflation. He emphasized a cautious approach in determining whether to further increase rates or maintain the current stance. Market sentiments anticipate another 25 basis points hike by year’s end, which bolsters US Treasury bond yields, thereby supporting the USD.
Furthermore, recent pro-market moves by China could limit the appeal of safe-haven assets like Gold. Specifically, China announced a decrease in stock trading stamp duty, cutting it from 0.1% to 0.05% effective August 28, aiming to rejuvenate the market and bolster investor sentiment. This initiative, the first of its kind since 2008, sets a generally optimistic tone in stock markets, possibly discouraging aggressive investments in Gold.
For the day, with no significant US economic updates expected, Gold’s performance will likely hinge on the interplay between USD valuations and overarching market sentiments. Notably, any substantial shift in Gold’s value may be constrained in anticipation of major US economic indicators due later in the week, such as the Non-Farm Payrolls report. Investors might remain on the sidelines, awaiting a decisive buying momentum, especially given Gold’s recent bounce from the March 13 low of $1,885.
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