The uncertainty leading up to Fed Chair Jerome Powell’s speech at Jackson Hole later today appears to have capped spot gold at its 50-day simple moving average.
In recent sessions, bullion has clearly been weighed down by revived bets for an ultra-hawkish Fed, which has translated into a resurgent US dollar.
Despite breaching the psychologically-important $1800 level in the first half of this month, bullion is now back trading around the mid-$1700s.
Markets have yet to fully price in a 75bps hike by the Fed in September, and are ready to adjust such expectations based on any possible policy clues out of Jackson Hole.
If markets buy into Fed Chair Powell’s insistence that policymakers remain hell bent on conquering the inflation scourge with more supersized rate hikes, that could spell a return to the low-$1700s for gold prices.
However, signs that the Fed is now willing to ease up on its ultra-aggressive stance may offer some relief for spot gold.