Future Uncertainties Are Supportive of Gold, but Dollar Strength Keeps Prices Muted

Market participants continue to be faced with uncertainties, uncertainty about the timeline for future Federal Reserve changes in their monetary policy, uncertainty about the length and damage the new Delta variant of Covid-19 has had on human lives and economic regrowth, and uncertainties surrounding the Taliban take over in Afghanistan.

Although these uncertainties continue to weigh heavily on the minds of market participants and support gold prices, gold has not been able to break above $1800. After last week’s dramatic sell-off and recovery in gold pricing, investors and traders in the precious yellow metal were able to move gold to a higher high, a higher low than last week, and an extremely fractionally higher close when compared to Monday’s opening price. Gold futures basis the most active December 2021 Comex contract opened on Monday at roughly $1780.10 and is currently trading down $0.40 and fixed at $1782.70.

Today the dollar traded to the highest value intraday, hitting a high of 93.75. However, as of 5:00 PM EST, the dollar index is currently down approximately 11 points (-0.12%) and fixed at 93.475. The dollar index traded to its highest closing value yesterday and ended the week with significant gains of just under 1% to achieve the highest closing weekly value in 2021.

That being said, the current value of the dollar index is far below the highs witnessed in March 2020 when the dollar traded just above 103 during the week of March 16, 2020.

Another factor in containing any major continuation of the last rally in gold is a reignited interest in cryptocurrencies such as bitcoin and Ethereum. Bitcoin futures gained $2042 in trading today, a net gain of 4.33%, with a single coin currently fixed at $48,720. Ethereum gained 3.49 % in value today, with a single coin currently fixed at $3265. Recent increases in the price of these major cryptocurrencies have resulted in investors moving some of their speculative dollars out of the safe-haven asset, gold, and into digital currency speculation.

As for now, traders await Federal Reserve Chairman Powell’s speech that will be given on Friday, August 27, to glean insight as to the most recent monetary policy changes planned by the Fed. These changes will most likely be addressed next week, but any concrete timeline to when the Fed begins to taper its monthly asset purchases will likely occur at the next FOMC meeting in September.

For those who would like more information, simply use this link.

Wishing you, as always, good trading,

Gary Wagner