[ad_1]
Gold Talking Points
The price of gold hit a new monthly high ($ 1,834) as President of the Fed Jerome Powell relayed an accommodating forward-looking stance to US lawmakers, but swings in risk sentiment could influence gold over the next few days as the Federal Reserve enters “calm period” ahead of interest rate decision July 28.
Fundamental forecast for gold: Neutral
The price of gold appears to be moving at the pace of its own drum, as bullion no longer shows an inverse relationship to US Treasury yields, and it remains to be seen whether future impressions of US data will influence the precious metal as the economic record remains fairly light for the coming week.
The plethora of housing data in the United States may have little influence on the Federal Open Market Committee (FOMC), as the minutes of the June meeting noted that the “ta standard of the Committee ‘further substantial progress‘ was generally considered to have not yet been achieved,“and it looks like the central bank will stick to the current course of monetary policy as”Participants agreed to continue to assess the economy’s progress towards the Committee’s goals and to begin discussing their plans to adjust the trajectory and composition of asset purchases. “
The wait-and-see approach to monetary policy could keep the price of gold afloat as President Powell and Co. brace for a transitory rise in inflation, but a growing number of Fed officials may change their tone in the over the next few months as President of the Saint-Louis Fed James bullard, who votes on the FOMC in 2022, insists that “It’s time to put an end to these emergency measures.“
That said, the price of gold may continue to move at the rate of its own drum, as looming US data is likely to have a limited impact on the outlook for monetary policy, and sthe wings of risk sentiment can influence bullion ahead of the Fed’s next rate decision as the central bank enters the blackout period.
— Written by David Song, Mint Strategist
Follow me on Twitter at @DavidJSong
[ad_2]
Source link