This week, gold has been fluctuating around $1885-$1900 due to the recent surge in the 10-year US Treasury yield to a new high since the 2007 financial crisis. Market participants remain cautious about the possibility of further increases, and the bullish sentiment is subdued. Additionally, as the market believes that higher interest rates will be sustained for a longer period, providing support to the US dollar, the likelihood of a sharp decline in the dollar in the short term is low. Therefore, the rebound in gold may depend on the outcome of the Jackson Hole Symposium, which is set to open this Thursday.
The Jackson Hole Symposium, starting this Thursday, is expected to provide important guidance for the gold market this week. Participants in this event include Federal Reserve Chair Jerome Powell, the European Central Bank, the Bank of England, and the Bank of Japan governors. Among them, the market will closely watch Powell's speech and the signals it releases regarding future monetary policy stance.
Looking back at the previous Jackson Hole Symposium, Powell made impactful remarks in a brief 10-minute speech. He emphasized the urgency of restoring price stability and the potential costs associated with reducing inflation, stating that "it does take some time, and it involves some pain for households and businesses."
Considering that the US inflation rate has declined from its peak of 9.1% in June 2022 to the current 3.2%, the probability of Powell making very hawkish comments appears low. However, achieving the Federal Reserve's target of 2% inflation remains pending, as mentioned by several Fed officials in the past.
Regarding Powell's speech this week, Jack McIntyre, an investment manager at Philadelphia-based Brandywine Global Investments Management, expects that Powell is unlikely to make any "game-changing" remarks.
From a technical perspective, it is worth noting that gold has not managed to decisively break above the 200-day MA near $1900 in the past week. Although it has tested the significant support level at $1885 multiple times, it has temporarily held up. Currently, gold is consolidating in the range of $1885-$1905, showing a tendency for minor rebounds, but confirmation from major information is still awaited.
