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The three-day meeting will feature speakers from central banks around the world, and could provide clues on monetary policy changes.
The gold price pulled back on Tuesday (August 22) after trading near a three-month high earlier in the day.
As of 4:00 p.m. EST it was changing hands at $1,285.54 per ounce, pressured by the stabilizing US dollar. A stronger greenback makes commodities priced in dollars more expensive for investors using other currencies.
Last week, the yellow metal briefly passed the $1,300 mark, and analysts believe prices are likely to remain high on the back of geopolitical uncertainty.
“Regardless of the short-term losses, the yellow metal remains heavily supported by geopolitical risk and political drama in Washington,” said Lukman Otunuga, a market analyst at FXTM, in a note.
“There is still a lingering air of caution ahead of the Jackson Hole conference later this week and this should empower gold bulls,” he added.
The three-day annual meeting will feature speakers from central banks around the world, including US Federal Reserve Chair Janet Yellen and European Central Bank President Mario Draghi. It could provide clues on changes in monetary policy.
“Draghi could take the opportunity to downplay the idea of monetary tightening in the euro zone, which would have a dampening effect on the euro and lift the dollar,” noted Julius Baer analyst Carsten Menke.
He continued, “[f]rom the Fed’s perspective, we think they are not too concerned about weaker than expected inflation readings … It’s pretty clear the Fed needs to raise rates.”
The Fed will meet again from September 19 to 20 to decide whether to increase interest rates again.
Gold is highly sensitive to interest rate hikes, as it tends to fare better when rates are low and often struggles when they increase. That’s because higher rates curb the investment appeal of non-interest-bearing assets like gold.
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.
