This Event Could Change Everything for the Gold Price Next Week, Expect Extreme Volatility—Analysts

The comments below are an edited and abridged synopsis of an article by Anna Golubova

A stronger US dollar is keeping gold under pressure for now, because markets are confused by Fed messages.

This Event Could Change Everything for the Gold Price Next Week, Expect Extreme Volatility—Analysts | BullionBuzz
A large quantity of gold nuggets and flakes rest in the bottom of a pan covered with water. There is some remaining sand and small pebbles at the bottom of the pan and debris floating on top of the water. The ridge in the lower left is part of the specialized pan and aids in catching gold while washing away sand.

The markets are waiting for the US government to generate some fiscal stimulus to keep the economy going. However, with a hiatus until September, it doesn’t look like relief is coming.

The dip in the gold price appeared to be related to profit-taking, and some strength in the US dollar recently.

The markets will hear more from central bankers during the annual Jackson Hole symposium, which is being held virtually this year. Fed Chair Jerome Powell is scheduled to speak on August 27.

Gold’s wild ride will continue this week, said RBC Wealth Management managing director George Gero, noting that Powell’s speech will be a significant event. “People are going to hold back on trading until they can digest the Fed’s message,” Gero said. 

In other central bank news, a group of former Fed officials wrote an open letter in opposition to US President Trump’s Fed nominee Judy Shelton.

Shelton’s Fed nomination was passed by the Senate Banking Committee in July and now needs to be approved by the full Senate. No date for the vote has been scheduled yet.

The overall trend has not changed in gold, but expect high volatility levels throughout the fall. Strength in the US dollar is unlikely to continue, and many are optimistic on gold in the medium term. Gold’s losses in the last two weeks are not particularly significant, because the fundamentals remain bullish.

The $1,900 level has strong support built in, and there are plenty of investors interested in buying at that price.

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