Commodity Blog

Commodity news, technical and fundamental analysis, market data on precious metals, energies, industrial metals, and soft commodities


Gold Adds to Gains Despite Hawkish Jerome Powell Speech

August 24, 2018 at 15:09 by Andrew Moran

Gold futures are adding to their gains at the end of the trading week, despite the head of the US central bank delivering a hawkish speech at the annual symposium at Jackson Hole, Wyoming on Friday. The yellow metal’s ascent was buoyed by a weaker greenback and a contradictory view from another key central banker.

December gold futures surged $16.20, or 1.36%, to $1,210.20 per ounce at 15:33 GMT on Friday. Gold prices are on track for a weekly gain of 1.5%, one of its best weekly performances since the beginning of July. Year-to-date, the yellow metal is still down about 9%.

The white metal is also rallying on Friday as December silver futures advanced $0.25, or 1.7%, to $14.89 per ounce. The sister commodity to gold is poised for a tepid weekly jump of 0.1%, lowering its YTD gains to 14.08%.

Markets are paying close attention to the Federal Reserve annual retreat in Jackson Hole. Fed Chair Jerome Powell spoke in a hawkish tone, explaining that he forecasts further interest rate increases and that the national economy is “strong” enough to handle more normalization of monetary policy.

I see the current path of gradually raising interest rates as the [Federal Open Market Committee‘s] approach to taking seriously both of these risks.

As the most recent FOMC statement indicates, if the strong growth in income and jobs continues, further gradual increases in the target range for the federal funds rate will likely be appropriate.

The economy is strong. Inflation is near our two percent objective, and most people who want a job are finding one. My colleagues and I are carefully monitoring incoming data, and we are setting policy to do what monetary policy can do to support continued growth, a strong labor market, and inflation near two percent.

Powell refused to respond to President Donald Trump’s remarks this week in which he slammed the central bank and his nominee to helm the Eccles Building. Trump is not pleased that the Fed is raising interest rates, telling the press that he thought the central bank would be accommodating to his administration in the same way previous Fed Chairs were.

Since Trump became president, policymakers have pulled the trigger on five rate hikes, bringing the benchmark funds rate to a range of 1.75% to 2%. It is widely expected that the Fed will raise rates two more times in 2018 – one in September and the other in December.

Also at the Jackson Hole event, St. Louis Fed President James Bullard revealed that he wants the Fed to pause and wait for other developments before future rate hikes.

Meanwhile, the US dollar is tumbling as the greenback fell 0.47% to 95.19. A lower buck is good for dollar-pegged commodities because it makes it cheaper for foreign investors to purchase.

In other metals markets, September copper futures soared $0.05, or 1.73%, to $2.70 per pound. September platinum futures edged up $12.20, or 1.57%, to $790.60 an ounce. September palladium futures tacked on $21.50, or 2.36%, to $932.70 per ounce.

If you have any questions and comments on commodities today, use the form below to reply.

Leave a Reply