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Home / Business / What will Powell do in Jackson Hole and what will it mean for gold? Analysts weigh in

What will Powell do in Jackson Hole and what will it mean for gold? Analysts weigh in



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(Kitco News) – Chairman Jerome Powell is likely to leave much leeway in the face of the Federal Reserve's upcoming key interest rate decision in September According to analysts, the central bank will need to speak during its speech Maneuvering at the Jackson Hole Symposium on Friday.

Analysts believe Powell will be titled "Monetary Policy Challenges" during its Jackson Hole speech.

Powell's Friday appearance was guided by the same topic as his July press conference, in which the Fed holds no Special commitments: Rhona O & Connell, Market Analysis Manager for EMEA and INTL FCStone Asia, said Kitco News.

"What Powell did at this press conference on July 31

st is the basis for Friday, he deliberately did not pledge the Fed, he gave himself a respite, which is a reasonable thing." because he is not in control of the global economy. And he needs to give the Fed the flexibility he needs to deal with the upcoming developments, "O'Connell said.

During the speech in front of Jackson Hole, Powell will probably open the door for another 25 basis point cut,

"Powell will be aware of the fact that the first key interest rate cut in July caused near-uncertainty among consumers as they raised concerns about current spending," O'Connell noted. [19659004] The Fed wants to bring more momentum to the market, but avoid any anxiety that could delay larger purchases. "

" Another 25bps is likely to bring more stimulus to the market, but a cut of 50 points Could Trigger Red "Strong US economic data will also force Powell to avoid" invading another corner, "said BBH chief global currency strategist, Win Thin on Monday.

"While the door is closing … We do not think Powell will push the Fed into a corner again, not if the data suggests otherwise," Thin wrote. "In fact, the picture drawn last week by the US data is good, with retail sales up 0.7% m / m from the expected 0.3%, the so-called control group used for GDP calculations In addition, the Federal Reserve is still trying to figure out how to respond to global trade tensions, Thin added.

"No one can really say what the probable reaction of the Fed is right Markets clearly believe that the Fed will rescue Trump again, but we are not sure." We do not think the Fed has bad trade and fiscal policies Rate cuts, "he said.

Meanwhile, US President Donald Trump has not lessened as he put more pressure on the Fed to lower its key interest rates more aggressively.

"The policy rates should be lowered by at least 100 basis points over a relatively short period of time, perhaps with some quantitative easing," Trump said in a Twitter post.

BBH, howeve r, sees the Fed as reluctant to lower interest rates again as soon as possible, adding that the central bank initially wants to monitor the true impact of trade tariffs.

"We do not believe the Fed is willing to give in to Trumps demands, and the Fed rightly believes that the impact of tariffs is not yet fully felt and therefore remains unknown," said Thin.

Powell will most likely be worse off than markets expect, said Pepperstone research chief Chris Weston, "With a 32 percent chance of a 50 basis point cut in September FOMC interest rates, Powell will be smarter on the downside than the current ones Expect prices and it could be a USD positive affair. " Weston said in a note on Monday.

On Monday afternoon, however, market sentiment seemed to shift to a less temperate one. At the time of writing, markets are pricing in a 95% chance of 25 basis points and only a 5% chance of a 50 point cut, according to CME FedWatch Tool.

What does all this mean for gold?

A Hawk-based Powell Could Lead to More Gold Price Consolidation Analysts pointed out this week.

"If the price does not provide any further impetus at some point, you'll start taking profits, so if you'd get up so quickly in such a short time, you would normally have expected a bigger pullback, we did not have one," said O & # 39; Connell.

It will still be a bull market, O Connell added, highlighting the next support at $ 1,480- $ 1,450.

"Market that has enough uncertainty A downturn is a correction We have changed the range to gold In the current environment, it is impossible to call a bear market $ 1,600 may well happen, but we will not in a straight line, "she said.

Gold is battling the stock market upswing and risk sentiment this week, as Kitco's senior technical analyst noted.

Gold and silver prices are lower at midday on the US trading day as traders and investors risk appetite increased significantly at the start of the trading week. Even the bull markets see no daily price increases. In fact, the consolidation of the corrective measures is healthy, indicating that the bullish trend can continue, "said Wyckoff.

At the time of writing, Comex Gold traded at USD1,507.20 in December, a decrease of 1.08%.

The views expressed in this article are those of the author and may not reflect the views of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided This document is for informational purposes only and does not constitute an invitation to exchange any goods, securities or other financial instruments. Kitco Metals Inc. and the author of this article assume no liability for losses and / or damages arising from the use of this publication.


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