Waiting for Jackson Hole

Every year on the last weekend in August, the US Federal Reserve invites economic leaders from around the world to gather at the Jackson Hole economic symposium. Market observers will be turning their attention to the respective speakers, especially Fed chairman Jerome Powell, who will give his outlook on the Fed’s trajectory in the coming months at 16:00 CET.

Otherwise, the week thus far has been marked by almost exponentially rising energy prices in Germany and across Europe. New records were set for contracts traded on the Leipzig Power Exchange in electricity for delivery in Germany, as well as for futures prices on French electricity and natural gas prices on the Dutch TTF futures exchange. European energy crisis fears for the coming winter are thus intensifying and causing a risk premium to be priced into the euro exchange rate. The euro has depreciated against the US dollar to its lowest level in 20 years and receded further against other currencies, such as the Swiss franc.

Contrary effects on gold prices

Until yesterday, yields in the Eurozone and the US rose significantly, returning to the levels of mid-June and early July, respectively. The firm US dollar and rising yields slowed the upward movement of the gold price. The turbulence on the energy commodity markets and recession fears, on the other hand, provided more of a tailwind. In terms of their effect on the gold prices, however, these effects offset each other, and gold prices remain near last week’s levels.

Gold was quoted at 1,757 US$ per ounce early on Friday last week and then more or less steadily slid to its weekly low of 1,728 on Monday, rallying just as steadily to yesterday’s weekly high of 1,765 US$ per ounce. The precious metal then fell back slightly (due to the somewhat firmer US dollar) and traded at around 1,758 US$ per ounce at 8:00 this morning.

Xetra-Gold with slight weekly gain

The Xetra-Gold price benefited from the further weakening of the euro against the US dollar and gained moderately within regular trading. While Xetra-Gold traded at 55.80 € per gram last Friday morning and at a weekly low of 55.55 € per gram on Monday, it recovered to a weekly high of 56.80 € per gram yesterday. This morning before 8:00, Xetra-Gold traded at around 56.70 € per gram.

Both the upcoming labour market data, due for release in the US next week and, in particular, August inflation data later on will likely be more influential on market development than Jerome Powell’s Jackson Hole speech. The euro is expected to remain under pressure from the feared energy crisis.

I wish all readers a pleasant weekend, despite the announced thunderstorms.