Markets analysis on
Gold remained under some pressure, extending Friday’s decline and hitting a near two-week low. The metal reacted to Federal Reserve Chair Kevin Warsh’s address at the Jackson Hole Symposium. Warsh reaffirmed the 2% target and highlighted elevated inflation currently. Expectations of an interest rate hike at the Fed September meeting rose as a result, pushing Treasury yields up significantly on Friday.
While U.S. Treasury yields eased slightly today, they remain elevated and could continue to weigh on non-yielding assets like gold. The dollar retreated slightly as well but offered limited support. The metal could remain exposed to the geopolitical developments in the Middle East, where a rebound in oil prices could fuel inflation concerns again after the U.S. military targeted Iranian forces.
Looking ahead, gold could continue to react to changing monetary policy expectations ahead of the September 16 Fed interest rate decision. Any softness in incoming inflation and labour data could ease the pressure, while firmer figures or more hawkish Fed comments may extend the decline. Markets will also watch for any shift in tensions in the Middle East and changes in oil prices.
Zaid Barem / ymm
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