Gold futures edged higher in the final hours before Federal Reserve chairwoman Janet Yellen speaks at the annual Jackson Hole symposium.
Gold for December settlement on the Comex division of the New York Mercantile Exchange gained $6.20 or 0.5 percent to $1,330.80 per ounce. Trade has ranged from $1,323.70 to $1,331.70.
Central bankers have gathered in Wyoming this week to discuss monetary policy and the course of the American economy as it moves into the second half of the year.
Hawkish rhetoric has become common place with various central bankers stating that a near-term rate hike would be appropriate if the data supported such a move.
Preceding the speech, St. Louis President James Bullard said that the September meeting might be a good time to raise the Federal Funds rate.
“If we got to a meeting and we felt things were looking stronger, that might be a good time to do that,” Bullard said with an important caveat that the weak second quarter GDP was below previous trends and a concern for the policy-board.
Prediction markets aren’t expecting the Fed to move in September and are only assessing a 42 percent chance that the Fed raises rates at all this year, according to the CME Group FedWatch.
Yellen has been adamant that the US central bank should raise rates at least twice this year and begin the extended process of normalising rates after initially increasing rates in December 2015.
“Markets are on ‘Yellen watch’ and were fairly quiet yesterday and again today,” Edward Meir, an analyst at INTL FCStone, said. “We are told that the speech will start around 10 am local time, which should mean that by early afternoon US east coast time, markets could start reacting to her remarks.”
Investment inflows into the exchange-traded funds (ETFs) tracked by FastMarkets have slowed in recent days – only 0.72 tonnes were added to holdings overnight, bringing the total to 2,117 tonnes. Investors are awaiting the conclusion of the Fed meeting before taking a position.
“Given ETF investors and speculative funds positioning, the overall sentiment indicates that they are confident and remain positive towards the yellow metal,” Andy Farida, FastMarkets analyst, said. “But we all know that these positionings are vulnerable since they are quite overstretched.”
In a jam-packed US data day, preliminary GDP, goods trade balance, consumer sentiment and inflation expectations are all set for release.
Meanwhile in European markets, Germany’s DAX and France’s CAC-40 were down 0.1 percent and unchanged respectively, while the dollar softened 0.1 percent to $1.1297 against the euro.
As for other precious metals, Comex silver for September delivery rose 19.1 cents or one percent to $18.680 per ounce. Trade has ranged from $18.470 to $18.740.
Platinum for October settlement increased $12.50 or 1.2 percent to $1,089.50 per ounce, while the most active palladium contract stood at $697.05 per ounce, up $12.05.
(Editing by Tom Jennemann)
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