Gold Slides As The Dollar And Risk Appetite Rises Ahead Of Jackson Hole Symposium

Gold prices edged lower on Wednesday as the U.S. dollar and risk appetite improved. The greenback rose 0.1% and dampened the yellow metal’s demand among investors using rival currencies. Risk sentiment advanced after the U.S. Federal Reserve rescheduled its Jackson Hole symposium to August 27 and decided to hold it virtually. The move eased market participants’ concerns about the Fed’s tapering plans.

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Spot gold is currently trading at $1,794.80 per ounce as of 0801 GMT.

The market will be monitoring Fed Chair Jerome Powell’s speech at the annual economic symposium in Wyoming to see if he will give a tapering timeline. But Goldman Sachs economists predicted that the central bank would likely reduce its bond purchases by $15 billion in November and by the same amount at the meetings that follow. The tapering would be $10 billion of U.S. Treasuries and $5 billion of mortgage-backed securities.

IG Market analyst Kyle Rodda said the Fed might take a softer stance on tapering, which is good news for gold. The central bank might talk about tapering but won’t provide a timeline, he added.

SPI Asset Management managing partner Stephen Innes noted that the risk-on narrative dampened gold’s appeal as an inflation hedge. He mentioned other headwinds for the bullion. These are the easing of Delta variant infections in some hotspots and the U.S. Food and Drug Administration’s (FDA) approval of vaccinations.

The FDA granted full approval to Pfizer Inc./BioNTech (PFE, BNTX) SE COVID-19 vaccine based on the company’s updated clinical trial. Public health officials hope the move will accelerate inoculations. National Institute of Allergy and Infectious Diseases Director Dr. Anthony Fauci said that they could get the coronavirus under control by early next year if the vaccinations ramp up. The U.S. has more than 150,000 new cases to date and averages a thousand deaths per day.

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