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Traders should not be surprised if the price of gold spends most of the week negotiating upstream of the Federal Reserve's Jackson Hole Economic Policy Symposium.
Weekly price of fundamental gold Provide: Neutral
- Gold prices (along with other precious metals) continue to outperform in an environment characterized by falling real sovereign yields, that is, inflation-adjusted returns. remain in negative territory.
- Traders should not be surprised if the price of gold spends most of the week negotiating upstream of the Federal Reserve's Jackson Hole Economic Policy Symposium.
- the IG customer sentiment index shows that gold prices in USD (XAUUSD) could make some of their recent gains in the coming days.
See our long-term forecasts for Gold and other major currencies with the DailyFX Trading Guides.
Gold prices in review
Gold prices, no matter how you measure them, had another good week. No major currency gained ground against gold, with gold prices in EUR (XAUEUR) leading with an increase of 2.11%. Gold prices in EUR (XAUEUR) are now fast approaching the unprecedented peak set in October 2016; many gold crosses have already reached new heights (gold price in Australian dollars (XAUAUD), gold price in pounds sterling (XAUGBP) and gold prices in New Zealand dollars (XAUNZD) spirit) .
However, most market participants are focusing on US dollar gold prices (XAUUSD), which also generated another strong week, with an increase of 1.11%. Gold prices, regardless of their currency, have risen sharply in recent weeks, thanks in part to the global monetary response to the US-China trade war; We will hear more about the state of global easing this week as central bankers from around the world head to Jackson Hole, Wyoming, for the annual Federal Reserve Economic Policy Symposium.
Concerns over the global trade war keep gold prices on the rise
Despite improving global stock market conditions over the past few weeks, little has changed positively on the US-led trade war front. Admittedly, the trade war between the United States and China has eased after US tariffs of 10% on $ 300 billion of imported Chinese products were postponed from September 1 to December 15.
Yet, central banks are increasingly right to unveil a more accommodating and accommodating policy in recent weeks – a trend that should continue – the fundamental context of gold prices remains optimistic in the long run. The fall in sovereign bond yields (especially German Bunds, British gilts and US Treasuries since the beginning of May) continues to fall. As a result, inflation-adjusted returns remain in negative territory – good news for precious metals.
Volatility slows before Fed's Jackson Hole meeting
The Fed's Jackson Hole Economic Policy Symposium, to be held this week, is expected to limit volatility in the coming days. Traders generally do not like to take important positions before the annual Fed summit. indeed, at the end of August, many trading desks remained absent for the summer holidays.
Beyond the prospect of an unplanned development (see: US President Trump's tweets) in the US-China trade war, the week before the Fed's Jackson Hole economic policy symposium will likely be quieter even if there are several sets of data to release.
Other major FX events of the coming week
Tuesday, the price of gold in Australian dollars (XAUAUD) will be the focus of concern with the publication of the minutes of the August meeting of the Reserve Bank of Australia. The price of gold in Australian dollars (XAUAUD) remains near its unprecedented peak. Elsewhere, commodity currencies will remain at the center of attention with the publication of the inflation report released by Canada last July, drawing attention to prices for the price of goods. gold in Canadian dollars (XAUCAD).
Gold prices expressed in EUR will also be taken into account with the publication of the August PMIs of the euro area, all the more so as the chances of a greater relaxation of the European Central Bank at the September monetary policy meeting have increased in recent weeks.
Net-Long Gold Futures is positioned just at the height of the year
Finally, with respect to positioning, according to the TCRC TOC for the week ended August 13, speculators decreases their net forward positions on gold at 290.1K contracts, slightly down since 292.6K netlong contracts held in the previous week. The market is still the longest since September 2016, despite the slight slowdown in bullish positioning.
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— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher, write to him at [email protected]
Follow him in the DailyFX real-time news feeds and Twitter to @CVecchioFX
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