Gold Back Under Pressure In New York Session

Gold price is bending below the European highs of $1,745.55. The precious metal is now losing 0.10% at the time of writing while the US dollar firms again, basing itself on a key measure versus a basket of rival currencies.

Gold trades heavy in a bearish territory with potential demand sighted at around $1,710. Powell’s Jackson Hole speech has reinforced the message that multiple and sizable hikes are looming, supporting the US dollar.

Powell’s Jackson Hole speech has reinforced the message that multiple and sizable hikes are still in the pipeline and that easing should not be expected to be on the horizon anytime soon. The outcome has weighed on precious metals that have dropped on the back of a surge in US dollar, making them more expensive for overseas buyers.

The prospects of higher interest rates and a jump in yields took the US dollar to a fresh two-decade peak at 109.478 on Monday after Powell stated that the central bank would raise rates as high as needed to restrict growth, and would keep them there “for some time” to bring down inflation that is running at more than three times the Fed’s 2% goal.

A capitulation on the gold price took effect on the back of his comments, chipping its way through the August lows and the week ahead could offer further catalysts from key economic data and Fed speakers. To start, embedding the hawkish sentiment, on Monday, in response to the market’s reaction to last week’s Jackson Hole, Minneapolis Federal Reserve Bank President Neel Kashkari crossed the wires emphasizing a seriousness about getting inflation back to 2%.

Markets will hear from other Fed officials and the data will be key with this Friday’s US job report the highlight. The data is likely to show a robust outcome for August. The Euro could benefit should the report show a more moderate pace following the booming 528k print registered in July.

High-frequency data, including Homebase, point to still above-trend job creation the analysts say. Markets also look for the UE rate to drop by a tenth for a second consecutive month to 3.4%, and for wage growth to advance at a firm 0.4% MoM (5.3% YoY).

Gold price closed heavily in the red territory at the end of the week and there is little sign of it time-wasting for the near-term on the approach to presumed support near $1,710. The price has also recovered 50% of the prior bearish impulse which adds further weight to the downside outlook.

If the bears commit to the course, a move below the said support area opens the risk of a test of the 2021 lows as far down as $1,678. On the flip side, $1,745 should be key.