The price of Gold progress lately in a triangular figure. The long-term trend has been very bullish, the gold metal appreciating near 14% in two months. Thus, the price is overextended.
But today, fundamentals will play a central role. Traders are expecting to know which kind of FEDis ahead. Announcements of sharp cuts and, even, another monetary easing could be in FEd’s Jerome Powell. Though, other economists expect not much from this speech.
“We don’t think that the Fed will provide much new information on either front. Jackson Hole is an academic conference and not the appropriate forum to announce a change in policy,” (TD Securities)
“Given the July decision, when the cut was only 25bps and Powell seemed unable to lead the FOMC to a bigger cut, the risk of any speech disappointing market expectations for dovishness is high.” (UBS Securities)
That means, Gold, the S&P500 and the dollar are in the spotlight, and we expect sharp movements today after the speech. If Powell’s words disappoint, we could witness moves to the downside for indices and the dollar, and an opposite movement for XAUUSD.