Gold has posted small losses in the Tuesday session. In the North American session, the spot price for one ounce of gold is $1208.36, down 0.20% on the day. On the release front, there was positive news from manufacturing and consumer confidence data. CB Consumer Confidence jumped to 133.4, crushing the estimate of 126.6 points. On Wednesday, the U.S publishes Preliminary GDP for the second quarter and Pending Home Sales.
It has been a rough road for gold, which has shed 8.7% of its value since April 1. Months of escalating trade tensions and tit-for-tat tariffs between the U.S and China rocked risk appetite, as the U.S dollar has made strong gains at the expense of other major currencies. Even though gold is a safe-haven asset, it failed to benefit from nervous investors, who flocked to the U.S dollar. A booming U.S economy has also contributed to a strong greenback and weighted on gold prices. Traders should keep a close eye on U.S Preliminary GDP for Q2, which is expected to post a gain of 4.0%. If GDP misses this estimate, investors could get cold feet and boost gold prices.
Gold ended the week on a high note, posting gains of 1.7% on Friday. The gains were in response to comments from Federal Reserve Chair Jerome Powell, who spoke at the Jackson Hole Economic Symposium on Friday. Powell reiterated that the Fed would continue its policy of gradual interest rate hikes, and this pledge not to change policy sent the dollar lower and boosted gold prices. Powell argued that current monetary policy is prudent, but the Fed continues to face criticism on both ends. Some analysts have argued that the Fed has been too aggressive, given weak inflation, while others say the Fed should tighten more quickly, due to the extremely tight labor market. Powell appeared to take a middle approach of raising rates, but slowly. The Fed has already raised rates twice this year, and a September hike is practically a given, with the CME Group estimating the odds of a hike at 96%. The odds of a December hike currently stand at 66%.
