Gold prices hit a 3-week low: Here we decode why
What's the story
Gold prices have fallen to their lowest level in nearly three weeks, driven by a stronger US dollar. The decline comes as investors await the US Federal Reserve's Jackson Hole symposium for hints on future monetary policy. The records for Fed's July meeting are also expected later today, providing further insight into the central bank's position amid expectations of possible rate cuts. Today, spot gold fell by 0.1% to $3,312.79 per ounce, marking its lowest level since August 1.
Market response
US gold futures also down
US gold futures for December delivery also fell by the same margin to $3,355.20 per ounce. The US dollar index hit its highest point in over a week during this period, making gold less affordable for buyers using other currencies.
Future outlook
Jackson Hole symposium to provide insights on rate cuts
The upcoming Jackson Hole symposium, scheduled for August 21-23, will see a key address from Fed Chair Jerome Powell. Market participants are closely watching this event for any signs of resistance against the market's expectation of a rate cut next month. Interest rate futures currently indicate two cuts of 25 basis points each this year, with the first one likely in September.
Investment strategy
Gold thrives in low-interest-rate environment
Gold usually thrives in a low-interest-rate environment and during times of heightened uncertainty. This is because lower interest rates reduce the opportunity cost of holding non-yielding assets such as gold.