Gold prices are climbing back, looking to rebound, and break past the $3,350 level. Having recently fallen to low $3,340 per troy ounce, they’re on the rebound and picking up pace. Until today, gold had been rallying off two-day highs. Further buying pressure is now offsetting some of the selling pressure, making its ascent difficult. The recent volatility in gold can be attributed to the Greenback’s efforts to rebound. This tax shift has added a new layer of volatility to the precious metals market.
With gold prices under negative pressure, all eyes are on the soon-to-be-released economic data that measures the pulse of business activity. These purportedly promote a better understanding of market forces and have an impact on the gold spot price even more. High on the radar is the Jackson Hole Symposium, where different central bank policies and economic outlooks are expected to be discussed.
The greenback has had a rough go about as well—mainly against the Japanese yen. The USD/JPY currency pair is indeed consolidating at present but has broken under the 50-day Simple Moving Average (SMA). On Wednesday, USD/JPY failed to recapture its highs with two consecutive bearish days and a -0.17% decline on the day. The recent sell-off of the Greenback stems from concerns regarding the Trump administration’s potential impact on the Federal Reserve’s independence.
Most market analysts are expecting a hawkish outcome to this year’s Jackson Hole Symposium. This would likely propel the USD/JPY above the pivotal 148.00 threshold. A non-hawkish outcome could push the currency pair below 147.00. These new situations have caused investors to look more critically at their exposure in both gold and currency markets.
While today’s selling pressure on gold is understandable, with declining U.S. yields across the curve, gold’s downside potential should be contained. Short term investors are betting on these factors to have a stabilizing effect on gold prices.
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