Gold futures marked their fourth consecutive day of gains on Wednesday, August 23, buoyed by a decline in U.S. bond yields and a weakened dollar, both factors contributing to a positive sentiment in the markets. The anticipation of Federal Reserve Chairman Jerome Powell’s speech at the annual Jackson Hole meeting on Friday has investors seeking cues about the potential trajectory of Fed interest rates, adding to the intrigue.
The price of gold futures surged by $22.10, equivalent to a 1.15% increase, closing at $1,948.10 per ounce. Silver futures followed suit with a noteworthy rise of 94.20 cents, indicating a 4.02% growth and reaching a closing price of $24.392 per ounce. Platinum futures experienced a similar upward trend, rising by $12.70 or 1.37%, reaching a closing value of $938.20 per ounce. Palladium futures were not left behind, as they climbed by $16.60, signifying a 1.3% growth and closing at $1,281.40 per ounce.
The greenback, measured against a basket of six major currencies, experienced a decrease of 0.14%, settling at 103.4197 on the dollar index. Simultaneously, the 10-year U.S. Treasury yield exhibited a decline to 4.227% in the previous night’s trading.
The dynamics of a weakened dollar and lower Treasury yields have positive implications for gold investors. A softened dollar makes gold contracts more affordable for investors holding currencies other than the dollar, while the decrease in U.S. Treasury yields reduces the opportunity cost of holding gold. This is particularly significant because gold, as a non-interest-bearing asset, becomes more attractive when the opportunity cost of holding interest-bearing assets such as bonds decreases.
The upcoming speech by Chairman Powell is widely anticipated to provide insights into the direction of interest rates. Analysts have varying predictions for gold’s future trajectory.
Bart Melek, a TD Securities analyst, foresees a climb in gold prices, potentially surpassing $2,100 in late 2023 and early 2024. Melek’s forecast is rooted in the belief that the Federal Reserve could conclude its cycle of raising rates.
On a similar note, David Nuhauser, an analyst at Livermore Partners, envisions gold reaching $2,500 by the close of 2024. He attributes this prediction to mounting recession concerns that could surface later in the year and beyond. Such concerns might prompt investors to flock to gold as a safe-haven asset.
These forecasts align with recent surveys that indicate widespread interest in gold as an attractive asset, especially among investors like wealth fund managers and hedge funds. The prevailing sentiment suggests a continued increase in gold investments over the next year, given the expectation that the Federal Reserve may abstain from further rate hikes and may even initiate a course of monetary policy easing in the coming year.
The Spot Market is Open
Thursday, August 24, 2023
| Metals Updated at | USD Bid/Ask | Ounce Change | Low/high |
| Gold 07.10 | 1,916.50 1,917.50 | +1.20 +0.06% | 1,814.70 1,917.70 |
| Silver 07.10 | 24.30 24.40 | 0.00 +0.02% | 24.28 24.41 |
| Platinum 07.10 | 931.00 941.00 | +1.00 +0.11% | 930.00 942.00 |
| Palladium 07.00 | 1,254.00 1,314.00 | +4.00 +0.32% | 1,249.00 1,314.00 |
| Rhodium 05.00 | 3,400.00 4,600.00 | 0.00 0.00% | 3,400.00 4,600.00 |