Two Gold drivers you must know


Gold has slightly moved in the direction of regaining its positions after the drastic drop in the mid-July. What are the Gold drivers that we should keep in mind?

30 August, AtoZForex – After the biggest weekly drop since the middle of July, Gold has staged a modest rebound. Here are two Gold drivers you must know - they represent factors that have affected the movement of the precious metal.

Two Gold drivers you must know: Possibility of two rate hikes 

Last week the Fed speakers were advocating a rate hike, while Fed Chairwoman Janet Yellen explained that the economy has improved over the recent months. As a result, the US dollar is currently holding the Gold and commodities back. The dollar rallied straight up right after Stanley Fischer’s statement that Yellen’s speech was “consistent” with the probability of two rate hikes in 2016.

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If to go into details, on 26th of August right after the Janet Yellen's speech, the Gold price fell to 1333 an ounce as she stated the case to raise interest rates is getting stronger as the U.S. economy is approaching the central bank's goals. As the Gold price and USD are correlated negatively, it can be expected that the case of the rate hike will decrease the Gold price. Even the verbal intervention by the Fed Chairwoman had a negative effect on the price of precious metal.

See also: Janet Yellen’s speech effect on Gold price

Monthly U.S. jobs report

The monthly U.S. jobs report is expected at the end of this week. This will be highly scrutinized  before the FOMC meeting towards the end of September of this year. While Gold is consolidating, the next move of the precious metal highly depends on the Fed and the value of US dollar. However, the price of Gold could attract more demand due to the upcoming US elections and further future uncertainty. Meanwhile, more liquidity is expected to enter the market as today London reopens after the bank holiday. The DXY has rallied from 94.14 to 95.55 while Gold fell to $1,318 from $1,358 and partially recovered to $1,327.85.

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