Gold remains in uncertain territory ahead of US jobs data this week
US jobs data. This week, COMEX Gold prices saw an uptick, marking their first weekly gain in four weeks, even amid a significant surge in the US dollar.
Previously, spot gold prices had dipped below the critical $1,900 per troy ounce threshold due to various factors, including US retail sales data and somewhat hawkish Federal Open Market Committee (FOMC) meeting minutes.
These minutes had hinted at potential inflation risks, suggesting the need for further interest rate actions.
However, a shift occurred when the US flash PMI data for August was released, revealing that business activity had nearly stalled. The S&P Global US Services PMI fell to 51 in August 2023 from 52.3 in the previous month, and the Manufacturing PMI dropped to 47 in August from 49 in July.
This prompted swaps traders to reconsider their bets on additional monetary tightening by the Federal Reserve, leading to an upswing in gold prices.
In a highly anticipated speech at the Jackson Hole symposium, Fed Chair Jerome Powell acknowledged the progress in alleviating inflation from last year's peak. Nevertheless, he cautioned that inflation still remained «too high,» implying that interest rates could stay elevated for an extended period and leave room for more rate hikes.
Powell also stressed that policy would continue to be restrictive until inflation steadily declined toward its 2% target. The Fed had raised its benchmark interest rate to a range of 5.25% to 5.5% the previous month, marking the highest level in 22 years.
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