Gold ended the week with a small increase at 1348.15 but moves into a strong buy position this week as traders look forward to Jackson Hole and Janet
Gold ended the week with a small increase at 1348.15 but moves into a strong buy position this week as traders look forward to Jackson Hole and Janet Yellen’s speech ahead of a possible rate increase in September. San Francisco Fed President John Williams said that the central bank should raise rates “sooner rather than later.” Everyone is entitled to his or her opinion, but Williams is not a voting member of the FOMC this year. Indeed, his region, centered around San Francisco but governing the mountain states, the Pacific Coast states, Alaska and Hawaii, will not be on the voting committee until 2018.
Gold fell on Friday for the first time this week as hawkish comments from U.S. Federal Reserve officials renewed bets on a U.S. rate hike this year, but was still on track to end the week with modest gains.
“There is no clear direction from the Fed. Adding to that there are mixed views from the Fed officials,” said Brian Lan, managing director at Singapore-based gold dealer GoldSilver Central.
Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar, in which it is priced.
The yellow metal soared in value since the Britain voted to leave the EU as investors switched to traditional safe assets. Moreover, gold is sensitive to higher rates by the US Fed, which lifts the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar in which it is priced.
Amid weakening greenback and fears of Eurozone crisis, the central banks across the world will buy more gold than they sell in a bid to diversify their reserves, causing the supply constraints and subsequent increase in gold price hike.
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Upcoming Economic Events that you should be monitoring:
Week of August 22-25, 2016
Date | Country | Name | Volatility | Previous |
8/23/2016 | GBP | Inflation Report | 3 | |
8/24/2016 | EUR | GDP w.d.a (YoY) | 3 | 1.8 |
8/24/2016 | EUR | GBP s.a (QoQ) | 3 | 0.4 |
8/24/2016 | EUR | GDP n.s.a (YoY) | 3 | 3.1 |
Government Bond Auctions
Date Time Country Auction
Aug 22 10:30 Germany Eur 1.5bn Aug 2017 Bubill
Aug 23 16:20 Italy Announces details of bond auction
Aug 23 18:00 US Holds 2yr note auction
Aug 24 10:03 Sweden Holds bond auction
Aug 24 10:30 Germany Eur 4bn 0% Oct 2021 Bobl
Aug 24 18:00 US Holds 2yr FRN auction & 5yr note auction
Aug 25 18:00 US Holds 7yr note auction
Aug 26 10:10 Italy Holds zero coupon