As of 4:53 PM, EST Gold Futures Base, December 2021’s most active Comex contract is trading at $ 1.10 and is currently set at $ 1805.20. Gold has traded today at an intraday high of $ 1812.20, just below the 200-day moving average of gold, set at $ 1813.30. The current price of gold, at $ 1805.20, places it below the 100-day moving average currently set at $ 1808.90.
As traders and investors wait to hear from Federal Reserve Chairman Jerome Powell on Friday, this will be the key event that dictates the future direction of gold. However, in the meantime, long-term moving averages on a technical basis provide an area of resistance.
Monday’s price rise brought gold closer to $ 1780 at prices above $ 1800, indicating that many traders are positioning themselves to get a more obvious tone from the Federal Reserve chairman when virtually is aimed at members of central banks around the world at the Jackson Hole Economic Symposium. The launch of the July FOMC meeting indicated a more hawkish tone than was perceived before the minutes were published. This tone may have diminished, as some of the more brazen members of the Federal Reserve seemed to approach the Delta variant as an event that could make them temper their stance.
As we mentioned in yesterday’s initial letter, at least two Federal Reserve bank presidents seemed to temper their stance and faltering statements last week. Rob Kaplan, president of the Dallas Federal Reserve Bank, and Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, made the remarks. With Kaplan saying he could “rethink his request for the Fed to start cutting monthly 120 billion and bond purchases if it looks like the spread of the Delta variant of the coronavirus is slowing economic growth.” And Kashkari said the “COVID-19 delta variant matters a lot” in the upcoming Federal Reserve debate on when to start slowing $ 120 billion in monthly bond purchases.
Since the beginning of the pandemic, the Federal Reserve has stated that its decisions depend on data. This is what makes President Powell’s job very difficult. Contradictory data from the Department of Labor’s work report showed that the U.S. economy was recovering and, at the same time, data on the alarming rise in Covid infection rates due to the Delta variants remain a potential key that could undermine this economic recovery.
For this reason, it is very likely that President Powell will not make any major announcements as to the timing on which the Fed will begin reducing its monthly asset purchases. It will likely address both the economic recovery in terms of the incorporation of additional jobs and the potential of the Delta variant to curb this recovery. I think this will make Fed members wait until the FOMC meeting in September to announce any short schedules, as they will have the latest figures from the August 2021 employment report and the current effect of the Delta variant in terms of the economic repercussions of the variant caused.
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