Gold futures trading resulted in strong gains on latest job market data

Gold futures experienced a strong gain of $18.70 today taking the most active December futures contract to $1965.60. Today’s gains are a direct result of the release of data revealing declines in the United States consumer confidence as well as job openings. This in turn led to extreme dollar weakness and a lower yield in U.S. Treasuries.

However, the big takeaway is that Powell’s latest speech at the economic symposium in Jackson Hole Wyoming, inferred that a tightening job market presented challenges to tackle their fight against inflation. The challenges of high inflation and a tighter job market combined infer that inflationary pressures will remain elevated for a longer time than previously assumed.

Chairman Powell’s speech left the option for more rate hikes on the Federal Reserve’s table. However, today’s data indicating a decline in job openings has led market participants to assume that the Fed will not continue to raise rates. This assumption is vastly different from the assumptions made after Powell’s speech last Friday.

The dollar lost approximately 0.50% in trading today which provided major tailwinds for the precious metal with traders actively bidding the yellow metal higher, taking gold futures 0.9% higher in trading today.

Investors are now waiting for the latest data on inflation which will be provided on Thursday, August 31 when the PCE (personal consumption expenditures) price index is released. This will be followed by the nonfarm payroll jobs report on Friday, September 1st.

Wishing you as always good trading,