Gold is back in the spotlight this week, bouncing higher on a softer U.S. dollar as all eyes turn to the Federal Reserve and its closely watched Jackson Hole symposium.
Investors are trying to get a clearer sense of where interest rates are headed next, and gold, long seen as a safe-haven asset has started to shine again.
As of the afternoon of August 20 (1300 GMT), spot gold was trading at $3,341.89 per ounce, up 0.8% after briefly dipping to its lowest level since August 1.
Meanwhile, U.S. gold futures for December delivery rose 0.8% to $3,385.80.
The U.S. dollar index (DXY) slipped 0.1% on Wednesday after touching a one-week high earlier in the session.
For gold traders, that’s good news, because gold and the dollar usually move in opposite directions. When the greenback weakens, gold becomes cheaper for holders of other currencies, sparking more demand.
The real action, however, is coming later in the week. The minutes of the Fed’s July meeting are due out Wednesday, and traders are hoping they’ll reveal whether policymakers are leaning more aggressively toward interest rate cuts.
Han Tan, chief market analyst at Nemo.Money, noted:
“Gold could see a slight lift prior to Jackson Hole, should the FOMC minutes show that the dissenting voices at the previous Fed policy meeting were louder than envisioned.”
This simply means that if more Fed officials are pushing for cuts than markets expect, gold could get an extra boost.
Then comes the main event: Fed Chair Jerome Powell’s speech at Jackson Hole, Wyoming, on Friday.
Every year, this economic symposium draws global central bankers and investors who hang on every word for hints about future policy. If Powell signals a dovish stance, expect gold prices to hold firm, or climb even higher.
Gold is mostly about safety in shaky times. Lower interest rates make gold more attractive because it doesn’t pay interest, so the opportunity cost of holding it is smaller. But beyond that, gold thrives during geopolitical and economic uncertainty.
And there’s plenty of that right now. Concerns over slowing trade, global growth jitters, and of course, the ongoing Russia-Ukraine conflict are keeping investors cautious.
“Precious metals should remain supported by lingering concerns over geopolitical risks and global economic concerns stemming from slowing trade,” Tan added.
Speaking of uncertainty, the geopolitical front was buzzing this week. U.S. President Donald Trump ruled out sending ground troops to Ukraine, but hinted that air support could be part of a broader peace deal.
Ukrainian President Volodymyr Zelenskiy called his White House talks with Trump a “major step forward” and suggested a possible trilateral meeting with Russian President Vladimir Putin could be on the horizon.
For markets, that’s still a lot of “what ifs” and investors tend to hedge those risks with safe-haven assets like gold and silver.
