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Gold Holds $1500 as Traders Await Fed Chairman Powell’s Speech on Friday

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After trading sharply lower yesterday, gold futures have recovered after holding the key level of $1500 per ounce. Yesterday’s range took gold futures to a low of $1503.30. Today gold’s intraday low was $1503 per ounce before trading higher. As of 3 PM EDT the most active December Comex futures contract is up five dollars and fixed at $1516.60. This price is just shy of the intraday high today came in at $1518.80.

When you compare yesterday’s price activity and market sentiment in the financial markets to today’s they seem to be polar opposites. Yesterday’s euphoria in equities which resulted in solid gains across-the-board in U.S. equity indices has now reversed in today’s trading with the Dow, S&P 500 and NASDAQ composite all trading just marginally lower with the daily decline between 4/10 of a percent and 6/10 of a percent. The decline in U.S. equities prices today ended the three-day winning streak.

This week could contain the most current sentiment of the Federal Reserve with two major events. First will be the release of the July 31 FOMC meeting minutes tomorrow. Traders will look to glean any pertinent information regarding the current demeanor of Federal Reserve members, with a more detailed perspective found within the minutes.

This will be followed by a speech from Fed Chairman Jerome Powell on Friday at the Jackson Hole symposium. This speech could clear up the uncertainties that resulted from his press conference last month which analysts bewildered after Powell stated that recent Fed action was a “midcycle adjustment” which sent U.S. equities sharply lower.

Most importantly analysts and market participants continue to wonder if the current Fed narrative will include multiple rate cuts. In a note to clients, and reported by CNBC, Evercore ISI economists Krishna Guha and Ernie Tedeschi said, “We think Powell will characterize the Fed as in the process of an ongoing mid-cycle adjustment in interest rates that is not complete (not one and done) and may extend further than originally assessed (not two cuts max),”.

In an interview with Bloomberg TV today, Mark Mobius continues to maintain an extremely bullish view on gold pricing with the expectation that the safe haven asset will continue to gain value. “Gold’s long-term prospect is up, up and up, and the reason why I say that is money supply is up, up and up. I think you have to be buying at any level, frankly.” He continues to recommend that market participants should a lot 10% of their portfolio in physical gold, citing an environment of global monetary easing which will continue to create strong demand for hard assets.

Considered to be one of the 10 top money managers of the of the 20th century (by the Carson group) and according to Bloomberg markets one of the 50 most influential people in 2011, it would be hard and probably foolish to disagree with Dr. Mark Mobius.

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Wishing you as always, good trading,

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