Gold continues to rally post weak PMIs

Gold hits 2-week highs closing at $1915 overnight

By Nadia Elbilassy | @Nadia Elbilassy | 24 August 2023

midday (3)
  • Jackson Hole Symposium and the statements from central bank governors closely eyed for the remainder of the week

  • Gold continues to benefit from the decline in the US dollar and bond yields

  • Nvidia stocks are rising following record quarterly profits

Gold rises once again to levels of $1,920 per ounce

Gold prices have continued to rise for the fourth consecutive session, settling near their highest levels in two weeks. Gold has been positively impacted by the decrease in the US dollar and Treasury bond yields, as investors cautiously await statements from central bank governors at the Jackson Hole Symposium.

In spot trading, gold has risen by 0.3% today, reaching levels of $1,921 per ounce, marking its highest point since August 10th. Meanwhile, gold futures have stabilized at $1,849 per ounce.

The US Federal Reserve is hosting its annual 2 day conference in Jackson Hole, which will run from today until August 26th. Investors are eagerly awaiting statements from Federal Reserve Chairman Jerome Powell to gain insights into the future direction of the bank and whether interest rates will remain at elevated levels for an extended duration.

Disappointing data released yesterday from the US led to heightened expectations that the Federal Reserve is nearing the end of its monetary tightening cycle. Consequently, the US dollar continued to drop in a weakened streak since the start of the week, while the yellow metal received all the support it could get, although its outlook remains dim with potential rate hikes around the corner. The data revealed a continued contraction in the manufacturing sector, with growth in the services sector also slowing down during the current month of August.

European stocks rise ahead of key statements from Jackson Hole

European stocks have witnessed notable gains as the markets look forward to the Jackson Hole Symposium and the statements from central bank governors at the forum.

The Eurostoxx 600 index has climbed by 0.4%, the FTSE 100 index has risen by 0.7%, the CAC 40 index has increased by 0.1%, and the DAX index has also risen by 0.1%. Among the top performers are real estate stocks.

Meanwhile, Companies in the chip industry within the tech sector saw strong gains powered largely by Nvidia, the world's leading electronic chip manufacturing company. Nvidia posted strong quarterly gains today surpassing market expectations for quarterly profits aligning with their from forecasts from Q2. Additionally, the decline in bond yields has contributed to the upward movement of European stocks, thereby bolstering risk appetite.

Shares of Nvidia listed on the Frankfurt Stock Exchange have soared by 8.7%, with the company announcing a new stock buyback program. Furthermore, interest-sensitive real estate stocks (SX86P) have increased by 1.5%, reaching their highest level in over a week.

On a separate note, Markets have become more divided on ECB rate hikes following disappointing data in Europe and the contraction of the manufacturing and services sectors in Germany. The situation oscillates between a potential halt in interest rate hikes, even if only temporary, due to mounting recession concerns, and the necessity of maintaining the current pace of monetary tightening. These deliberations are particularly relevant given the persistent rise in inflation, which has remained at levels that are not desired by the European Central Bank.