Gold slips as dollar surges ahead of Powell`s speech

Published on Aug 25, 2023 14:01

Gold futures slipped in the mid Asia electronic session today as the dollar index jumped past the 104 mark as the final day for Federal Reserve Chair Jerome Powell`s Jackson Hole speech arrives.

Investors were keen to gather hints about the US monetary policy path. It`s anticipated that Powell will reiterate the Fed`s commitment to higher interest rates to counter inflation risks, with a focus on data-driven decisions.

Two Fed officials` comments on Thursday added nuance. Federal Reserve officials offered conflicting views on the necessity of additional rate hikes at the Jackson Hole Economic Symposium. Patrick Harker of the Philadelphia Fed suggested rates are likely sufficiently high, while Boston Fed`s Susan Collins indicated potential need for more increases. They suggested that rising bond yields might complement the central bank`s strategy to gently rein in the economy and bring inflation closer to 2%. This sentiment indicated a potential easing of the need for further rate hikes.

Despite these dynamics, gold is poised to close the week with over 1% growth, marking a shift from a four-week slide. The driving force behind this reversal was the underwhelming business activity data unveiled in major economies. This backdrop provided the much-needed safe haven demand to the precious metal.

MCX bullion futures were last seen trading at Rs 58761 per 10 grams, down Rs 50 per 10 grams. The international bullion futures were seen trading at $1941, down nearly $6 an ounce. The metal is about to end the week up nearly 1.5%, however so far this month it is down more than 3%.