Gold, US Dollar and Treasuries: The Jackson Hole Play
Is gold going to stage a breakout post-Jackson Hole today?
Aside from what Chairman Jay Powell says at the Fed’s flagship event in Wyoming, the answer lies almost certainly with how the dollar and U.S. Treasury yields will react — and the impact of their combined actions on the yellow metal.
Of course, all that would be rote to those trading or following gold day in, and day out.
What isn’t known, though is how U.S. and global data would stack up over the next 3-½ weeks leading up to the Sept 20 rate decision of the Federal Reserve, which is still looking for a stay rather than a hike.
That’s super important because whatever Powell and his policy-making colleagues on the FOMC, or Federal Open Market Committee, say in the interim could turn academic in the face of that data. The central bank has repeatedly stressed that its decisions will be data-driven.
Still, the near-term direction is something our readers look forward to. And with gold’s stay in the $1,900-an-ounce lane looking as tenuous as possible — never mind the odds of it returning to $2,000 — we’ll attempt to plot the imminent highs and lows with the help of our regular collaborator in commodities charting, Sunil Kumar Dixit of SKCharting.com.
But first, a look at the tack Powell is likely to use at Jackson Hole and — notwithstanding that — the positives and red flags in gold’s way.
With price pressures cooling from a four-decade high of more than 9% in June 2022 to reach just 3% last month, Powell might see the need for his speech to be more rates-centric, to finish what’s left in the last mile of the central bank’s work: Returning to an inflation of 2%.
Former Fed Vice Chair Donald Kohn said in comments carried by Bloomberg said Powell likely “will caution
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