In this week's market report:

• Metals prove their stability

• The US Markets’ summer holiday

• Investors brace for Powell’s Jackson Hole Symposium address

Dear Investor,

Spot Gold Price AUD [XAUAUD]

Source: Trading View
(Click to enlarge)

Gold proves its stability: Gold prices have remained relatively stable this week as the Australian dollar gets stronger, which offset the recovery in the US$ gold price which rallied 1.68 % or US$30 from the low of the week, US$1,728.00. As such, the Australian dollar has gained 1.05% more purchasing power over the commodity, finishing the week at $2,518.83 an ounce.

Silver drops: Continuing to prove its high correlation with gold, silver has dropped by 1.63% this week, falling to $27.54 AUD an ounce.

Platinum sinks: Platinum continues to fall this week, falling by 3.13% to $1,264.22.

Palladium proves stable: After an unstable few months, palladium has moved less than 1.5% in the past 2 weeks, declining 0.76% this week to $3,078.15.

Shopping giants' profits hike: Coles and Woolworths increase profit margin by $1 billion following widespread consumer cost increases being consistently higher than product cost increases.

US Market on summer holiday: With many CEOs and leaders of US Hedge Funds and other influential economic institutions spending their summer on holiday, the US market is experiencing its annual lull, expected to subside in early-mid September when autumn brings everyone back to work.

Gold’s sensitivity following new Central Bank, Fed and PCE data

Gold prices will be very sensitive following Jackson Hole Symposium and new Personal Consumption Expenditures (PCE) inflation data to be released in the next week.

All eyes will be on U.S. Federal Reserve Chair Jerome Powell’s speech at the Symposium for any indication of the Fed’s interest rate and general moves in this half of the financial year – especially following Powell’s 2021 address, in which his comments regarding inflation and low unemployment have aged particularly poorly.

Bill Dudley, former President of the Federal Reserve Bank of New York and as vice chairman of the Federal Open Market Committee voiced his opinion in the Australian Financial Review:

I expect [Powell] to emphasise three themes [in his address]: that the economy still has forward momentum with an extremely tight labour market and unacceptably high inflation, that the Fed must tighten monetary policy further to restrain the economy and ease pressure on the labour market, and that the Fed won’t relent until it’s sure it has done enough for long enough to achieve its 2 per cent inflation target.
…
As the Fed closes the gap between where monetary policy was and where it needs to be, it may be able to move in a more measured way toward the same ultimate goal. From 2004 to 2006, for example, the central bank brought its interest-rate target from 1 per cent to 5.25 per cent in 17 consecutive 25-basis-point steps. The pace of tightening had little to do with where interest rates peaked.

Read on here.

Some economists have been consistently unconvinced by Powell’s leadership, Karl W. Smith writes for the Washington Post:

Some economists say Powell hasn’t been nearly strident enough. Former Treasury Secretary Larry Summers, for one, has seized on Powell’s statement that the Fed had nearly reached neutral levels of interest rates. Summers’ logic – that with core inflation at 4 per cent to 5 per cent, interest rates would need to be at least that high to bring “real” after-inflation rates down up to zero – makes superficial sense but is belied by market data.
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After Powell’s adoption of the transitory inflation hypothesis at last year’s Jackson Hole retreat, bashing him now is the path of least resistance. But his critics are fighting the last war. Powell’s words and actions since the beginning of this year have been right on target.

Read on here.

Many consider higher interest rates to have overtly negative impacts on gold prices, however George Milling-Stanley, Chief Gold Strategist at State Street Global Advisors points out for Barrons that “during the last two periods of sustained Fed tightening, gold prices actually rose strongly, countering the conventional wisdom that higher rates hurt gold investment because they raise the opportunity cost of investing in it...

For example, during the two years from June 2004 to July 2006, when the Fed raised rates 17 times, gold went up by 42%." If gold sees a surge following the Jackson Hole Symposium, it is worthwhile for investors to consider adding the ABC Bullion 10oz Gold Cast Bar to their investment portfolios.

Warm regards,

The ABC Bullion Team