Gold edges higher as greenback wavers amid hawkish rates stance

Gold was steady as traders weighed the Federal Reserve’s commitment to keeping monetary policy tight for some time in the wake of Chair Jerome Powell’s comments on Friday.

Powell indicated at Jackson Hole that the Fed was likely to keep raising interest rates and leave them elevated to quell inflation — even at the risk of the economy suffering. A stronger dollar and rising Treasury yields have also been weighing on gold, which fell to a one-month low on Monday and is set for a fifth monthly drop.

Minneapolis Fed President Neel Kashkari told Bloomberg’s Odd Lots podcast that sharp stock losses show investors had got the message, and that “people now understand the seriousness of our commitment to getting inflation back down to 2%.” The central bank will also step up the unwinding of its near-$9 trillion balance sheet this week.

“Markets generally reacted pretty heavily to the comments made by Powell and other central bankers present at Jackson Hole,” said Nicholas Frappell, global head of institutional markets at ABC Refinery in Sydney. “The tightening signals suggest that the US dollar will remain relatively strong,” he said, adding that there was some technical resistance for gold seen at the $1,740 an ounce level.

Spot gold fell 0.1% to $1 735.66 an ounce as of 10:41 a.m. in Singapore, extending its monthly decline to 1.7%. Prices fell to $1 720.45 on Monday, the lowest level since July 27. The Bloomberg Dollar Spot Index rose 0.1% Silver and platinum dropped, while palladium was little changed.

© 2022 Bloomberg

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