Gold prices experienced a slight dip on Friday, but there is hope that it may break a four-week losing streak. The market eagerly anticipates remarks from Federal Reserve Chairman Jerome Powell, scheduled for around 10 a.m. Eastern Time.
- Gold futures for December delivery (GC00, +0.01% GCZ23, +0.01%) fell by $1, or nearly 0.1%, settling at $1,947.10 per ounce on Comex. This marks the first loss in five sessions.
- Silver futures for September delivery (SI00, +0.31% SIU23, +0.31%) declined by 16 cents, or 0.7%, to $24.23 per ounce after gaining 4% on Wednesday.
- October platinum (PL00, +1.11% PLV23, +1.11%) rose by $9, or 1%, reaching $952 per ounce.
- Palladium for September delivery (PA00, -0.17% PAU23, -0.17%) experienced a decline of $4.10, or 0.3%, settling at $1,240 per ounce.
- Copper for September delivery (HGU23, +0.49%) rose by 3 cents, or 0.7%, to $3.80 per pound.
The highlight of Friday lies in Federal Reserve Chairman Jerome Powell’s keynote address at the Kansas City Fed’s annual economic symposium.
The concern for markets, particularly gold investors, is the potential for Powell to indicate a raise in the Fed’s estimates for the neutral rate of interest. This rate measures the theoretical level at which interest rates neither stimulate nor restrict an economy.
Why this abstract concept could rattle stocks when Powell speaks at Jackson Hole
The upcoming remarks made by Powell at Jackson Hole have the potential to greatly impact the stock market. Specifically, investors will be closely watching his comments about the trajectory of interest rates. The current high levels of US Treasury yields make Powell’s statements particularly influential. Depending on what he says, these rates could experience further growth or face a significant correction. This, in turn, would have a ripple effect on other assets including the USD, equities, and gold.
Gold Suffers: Rising Global Bond Yields and a Stronger Dollar
Over the past month, rising global bond yields and the strengthening US dollar have contributed to a decline in gold prices. On Friday, the yield for the 10-year Treasury note (BX:TMUBMUSD10Y) remained relatively stable at 4.238%. However, earlier in the week, this yield reached its highest level since 2007, closing at 4.339% according to FactSet data.
Interestingly, the stronger dollar likely played a role in gold’s weakness on Friday. The ICE U.S. Dollar Index (DXY), which measures the strength of the dollar against a basket of other currencies, was trading at 104.05 on Friday, marking its highest level since early June.