Gold futures moved Thursday lower in volatile trading that saw prices in both directions up as much as 2%.
Federal Reserve Chairman Jerome Powell announced changes to the central bank’s policy framework in a speech at the Jackson Hole Economic Symposium that were seen as offering a more accommodative monetary policy and to long-term Bullion buyers offer. However, the policy change was largely anticipated and analysts said some investors are committed to profit over the course of the speech.
In a statement, the Fed said it had adopted an “average inflation target” and acknowledged the benefits for a strong labor market. The Fed’s strategy maintains 2% annual inflation target, but the Fed said it “seeks to achieve inflation that averages 2% over time.”
To read:Fed unanimously adopts new strategy, generally seen as leading to easier policies
“It is difficult to overstate the benefits of maintaining a strong labor market, an important national goal,” Powell said in his prepared remarks on the policy change.
Gold traders already knew the Fed chairman’s speech would call for inflation, and gold prices initially rose, by more than $ 30 an ounce, in the first week of the speech, said Jim Wyckoff, senior analyst at Kitco. com, MarketWatch. Prices were then lowered when traders “discounted” Powell’s speech because it was not fresh news, he said.
The important thing is that the “total marketplace [is] shifted to more inflation, ”said Wyckoff, who moved prices for many goods higher. It’s a change in the psychology “from one of the price deflation that has been a problem in the last 10 years” to now one of the central bank’s ongoing monetary policy stimuli leading to potentially problematic price inflation . “That will keep the prices for precious metals going.”
Ahead of new week, Wyckoff expected to see “sideways to higher price action”.
In transactions on Thursday, gold GCZ20 in December,
GC00,
fell $ 24.60, or 1.3%, to $ 1,927.90 an ounce. Prices were traded as low as $ 1,914.70, but also as high as $ 1,987 during the session. Prices rose 1.5% on Wednesday to end that day at about a week high.
September silver SIU20,
meanwhile, 55 cents, or 2%, lost $ 26,895 an ounce after rising 4.4% on Wednesday, also its highest settlement in about a week.
Meanwhile, new applications for U.S. unemployment benefits fell again to just above $ 1 million in late August and resumed a downward trend, perhaps signaling the resumption of a slow or painfully slow recovery in the U.S. labor market.
Initial unemployment, a rough measure of layoffs, declined by 98,000 to 1 million from 1.1 million in the previous week, the Labor Department said Thursday. Meanwhile, a historic decline in U.S. 2nd quarter gross domestic product was revised to 31.7% annual rate of 32.9%.
Among other metals Thursday December copper HGZ20,
which is now the most active, trading at $ 2,973 per pound, down 0.3%. October platinum PLV20,
lost 1.5% to $ 926.40 an ounce, while the most active December palladium contract PAZ20,
throws 1.1% to $ 2,187.90 an ounce.
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