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Gold Prices Hover Around $1,500 as Attention Shifts to Jackson Hole

Investing.com - Gold prices traded lower on Thursday but remained closely pegged to the $1,500 psychological level as traders shifted their attention to the beginning of the Federal Reserve's annual Jackson Hole Economic Policy Symposium.

Gold dropped a day ahead of a speech from Fed Chairman Jerome Powell at the three-day event that markets hope will provide clarity on future easing. Minutes from the U.S. central bank's last policy meeting, released Wednesday, only added to confusion for the direction of monetary policy.

Spot gold fell $4.27, or 0.3%, to $1,498.28 a troy ounce by 9:20 AM ET (13:20 GMT), while gold futures for December delivery on the Comex division of the New York Mercantile Exchange, lost $7.75, or 0.5%, to $1,507.95.

Markets still expect the Fed to cut interest rates by another 25 basis points at its next meeting in September although the meeting minutes released on Wednesday showed a clear division of opinion with two policymakers voting against the last rate cut while “a couple” called for a larger 50 basis point cut.

“The global environment has clearly deteriorated since the July FOMC meeting and market participants are still hoping for a more pronounced dovish shift, possibly at this week's Jackson Hole symposium,” Petr Krpata, strategist at ING, said in a note.

Speculation that Powell could disappoint markets at Friday’s appearance has been on the rise.

While non-yielding bullion is generally considered to benefit from lower rates, Jeffrey Halley, market strategist at Oanda, said Powell may not need to signal multiple rate cuts to support gold prices.

“Gold could be a significant beneficiary of a Powell disappointment tomorrow, with the resulting stampede out of bullish equity and rates trades potentially benefiting haven assets,” he said in a note.

Ole Hansen, head of commodity strategy at Saxo Bank, repeated his bullish call on gold with a target of $1,585 due to numerous factors including a mountain of negative-yielding bonds, the ongoing trade dispute between the U.S. and China, and continued central bank buying.

“In the short-term however, the elevated long remains a challenge with the market in need of a catalyst to send it higher, in order to avoid the temptation from recently-established longs to book some profit,” he said in a note.

In other metals trading, silver futures fell 0.6% to $17.045 a troy ounce by 9:22 AM ET (13:22 GMT).

Palladium futures gained 0.3% to $1,469.60 an ounce, while sister metal platinum dipped 0.1% to $857.70.

In base metals, copper dropped 0.3% to $2.578 a pound.

-- Reuters contributed to this report.

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