Gold prices eased in Dubai on Friday morning as market participants awaited closely watched remarks from US Federal Reserve Chair Kevin Warsh at the Jackson Hole symposium later today.
In the UAE, the prices of 24K, 22K and 21K gold were trading at Dh552.5, Dh511.75 and Dh490.5 per gram, respectively, down around Dh2 per gram from Thursday’s close.
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Among the other variants of the yellow metal, 18K and 14K slipped to Dh420.5 and Dh328.0 per gram, respectively.
Spot gold was down 0.66 per cent at $4,580 an ounce.
Ahmad Assiri, research strategist at Pepperstone, said for gold traders, Jackson Hole is to dominate sentiment for the remainder of the week, with markets awaiting Fed Chair Kevin Warsh remarks for greater clarity on the Fed’s evolving policy framework and, importantly, how policymakers intend to respond to the increasingly complicated backdrop in US rates and fiscal policy.
“Warsh has emphasised a broader shift towards ‘no forward guidance’ stance, allowing market dynamics to independently price the outlook for growth, inflation and interest rates rather than relying on signals from policymakers. Jackson Hole therefore represents an important test of this framework,” he said.
Markets will then be looking for clues on the Fed’s reaction function heading into the September FOMC meeting, particularly around inflation pressure, the labour market and financial conditions.
The Treasury’s recent announcement of intervention in the 30-year Treasury market only adds more complexity to the outlook.
While the Fed is attempting to allow markets greater independence in determining rates, the Treasury is increasing buybacks of longer-dated bonds to contain pressure on long-term yields. This creates a potentially uncomfortable policy divergence and makes Warsh’s communication particularly important and close to a delicate balance.
“From a gold perspective, this backdrop seems broadly supportive over the coming weeks. Concerns around US fiscal sustainability remain difficult to ignore as federal debt surpasses $40 trillion, while Treasury measures aimed at containing long-term yields could also weigh on the US dollar.
“Jackson Hole is therefore the immediate catalyst to watch. A message from Warsh that indicates expectations for accommodative policy and tolerates somewhat looser financial conditions could weaken the dollar and provide another leg up for gold,” added Assiri.
Source: Khaleej Times