Gold ticks higher as dollar slips; focus turns to Powell’s speech
· Gold edged higher on Tuesday as the dollar dipped, with investors awaiting U.S. Federal Reserve Chairman Jerome Powell’s speech later this week, while a rally in equity markets limited bullion’s advance.
· Spot gold was up 0.2% to $1,935.88 per ounce by 0335 GMT. U.S. gold futures gained 0.1% at $1,941.60.
· On Thursday, Powell is due to talk at a gathering of central bankers in Jackson Hole, Wyoming, where he is expected to provide further clarity into the U.S. central bank’s efforts to revamp its approach to monetary policy.
· “There is lot of focus on Jackson Hole symposium and Powell’s speech. I think the markets are reluctant to commit to a direction until that happens,” said DailyFx currency strategist Ilya Spivak, adding that gold prices are closely tracking movements in the dollar.
· “We have seen a pullback in gold since beginning of the month around the sense that may be the Fed is not going to do much in terms of expanding its policy tool kit.”
· The central bank has rolled out a wave of fiscal and monetary stimulus measures and cut interest rates to near zero to combat the economic toll caused by the pandemic, helping gold climb nearly 28% this year.
· Lower interest rates decrease the opportunity cost of holding non-yielding bullion and weigh on the dollar, making gold cheaper for investors holding other currencies
· The dollar index fell 0.1% against its rivals on Tuesday.
· Limiting gold’s appeal, Asian stock markets rose as investors cheered signs of progress in U.S.-China trade negotiations and following a fresh Wall Street rally.
· On the technical side, spot gold may test a support at $1,911 per ounce, as suggested by its wave pattern and a projection analysis, said Reuters technical analyst Wang Tao.
· Elsewhere, silver gained 0.6% to $26.71 per ounce, platinum rose 1.2% to $926.32, and palladium climbed 0.9% to $2,180.47.
Reference: FXStreet, CNBC
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