Gold’s swift drop to the lowest since March has highlighted a tough truth for the precious metal -- there’s a growing list of reasons to be gloomy.
was exaggerated by a combination of technical factors and poor liquidity, the initial trigger remains true — strong U.S. jobs data showed the world’s largest economy is well on its way to recovery. That sets the stage for the tapering of stimulus by the Federal Reserve, potentially removing one of the key drivers that helped send gold to a record last year.
Investors will now turn their attention first to the U.S. inflation data scheduled for later this week, and then ahead to signals from Fed officials at the Jackson Hole conference later this month. The timing of tightening by the U.S. central bank is key, and hawkish talk from Chair Jerome Powell could spell the start of a definitively bearish market for bullion.
rates further down the curve. That would imply healthy and controlled price increases which wouldn’t benefit gold. The consumer price index due Wednesday will prove the latest gauge for investors, and is expected to be more muted compared to previous months. Strong U.S. jobs data raised expectations for Fed rate hikes, giving the dollar its biggest gain in about a month on Friday. Meanwhile money markets indicate the European Central Bank won’t tighten until at least mid-2024. That sets the stage for a stronger greenback, which would hurt gold.Gold’s plunge earlier Monday has broken below the neckline of a weekly head and shoulders pattern that may embolden bears in the medium term.
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