Yet another all-time high for gold. The precious metal breached and successfully held the psychologically important $2,500 threshold after an impressive 2% rally on Friday. Growing expectations of an interest rate cut on the Dollar, possibly as early as September, prompted inflows into the safe-haven asset.
The more recent economic data publications have in fact painted the US economy in a more positive light, leading many to question the need for an immediate cut. Nevertheless, the Dollar tumbled during Friday’s session, the DXY falling 0.6% to just 102.4, a daily close not seen since January. Weakness in the Dollar translated to a solid rise in the Pound Sterling, which finished the week at $1.294, well within reach of the $1.30 resistance that failed to capitulate a month ago.
Looking ahead, the dominant economic event this week will no doubt be the Jackson Hole Symposium, which kicks off on Thursday in Wyoming. The three-day event will host economists, central bankers and other financial titans from all over the world, including the Federal Reserve Chair, as well as Andrew Bailey of the Bank of England and Christine Lagarde of the European Central Bank. Amongst other topics, the symposium will focus on high interest rates and monetary policy, so by the end of the week there should be some clues as to which way the liquidity vane is pointing. More concretely, the FOMC minutes for the July meeting will release on Wednesday, followed by a speech from Jerome Powell on Friday.
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