PRESS ROOM
More hawkishness from central banks weighs on precious metals.
Thursday 15th September '22
Powell’s speech at Jackson Hole didn’t help gold. If there was any expectation of a dovish pivot from the Federal Reserve anytime soon, it was eroded after the symposium. More hawkishness from the Fed means strength for the US dollar and gains in US Treasury yields – neither of which is a welcome sign for gold. Both things continued to materialise last month, and so did the expected impact on gold. But Fed hawkishness at a time when the US is already in a technical recession, and sentiment is largely risk-off in equity markets, should result in greater demand for defensive assets. This has not yet materialised given net outflows from precious metals exchange traded products globally in the last month and speculative positioning on futures also largely declining. This, to us, suggests that gold’s credentials as a hedge against economic risks are currently underappreciated – something that may get rectified in the coming months.