Gold Retreats As U.S. Dollar Rebounds From Session Lows

Key Insights

• Higher yields and stronger dollar put pressure on gold markets. 
• WTI oil is losing ground as traders fear that aggressive Fed will hurt demand. 
• Natural gas markets stay strong as Europe’s energy crisis worsens. 

Gold Is Moving Lower After Powell’s Speech

Gold markets found themselves under pressure after Fed Chair Jerome Powell delivered his speech at Jackson Hole Symposium.

The U.S. Dollar Index (DXY), which has been under pressure right after the speech, has managed to gain some upside momentum and moved from 107.60 to 108.40.

Meanwhile, the yield of 2-year Treasuries moved above the 3.40% level. A combination of stronger dollar and higher yields is bearish for gold and other precious metals.

There is no demand for gold as a safe-haven asset. S&P 500 is down by about 2% today, but traders do not rush to buy gold.

Gold failed to settle above the 20 EMA at $1760 and is moving towards the support level at $1730. As a result, gold remains in a downside trend, which has emerged after gold failed to settle above the $1800 level. A move below the $1730 level will push gold towards the support at $1715.

Other precious metals are also under pressure today. Silver has declined towards the $19.00 level, while platinum is trying to settle below the support at $855. Palladium markets were strong ahead of Powell’s speech but lost positive momentum, and the price of palladium retreated towards the $2100 level.

WTI Oil Retreats On Worries About Economic Growth

WTI oil declined below the $93.00 level as traders were worried about the strength of economic growth. As Powell is focused on the battle against inflation, he said that the Fed would make steps to moderate demand.

Weaker demand in the economy means weaker demand for energy, including oil. Most likely, traders will stay focused on general market sentiment after Powell’s speech, which may lead to a stronger sell-off.

Natural Gas Moves Higher As European Markets Rally

Natural gas prices managed to get above the $9.50 level as European natural gas markets tested new highs.

The situation in Europe gets worse day by day. Norway refused to supply natural gas to EU at cheaper prices. Not surprisingly, the rally in the European natural gas markets continued.

While the situation in Europe does not have a direct impact on U.S. natural gas markets as Freeport LNG is not operating, the huge rally in the European markets provides significant psychological support to U.S. markets.

For a look at all of today’s economic events, check out our economic calendar.