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Upcoming events and reports will have a profound impact on gold

Commentaries & Views

Beginning on Tuesday, March 7, a series of events and reports most certainly will have a tremendous impact on the direction of gold prices as well as the magnitude of gold’s overall price gains or losses. On Tuesday the chairman of the Federal Reserve Jerome Powell will address the Senate Banking Committee marking the beginning of a two-day event. The following day Jerome Powell will testify to the House Financial Services Committee a semi-annual event.

According to a press release by the Financial Services Committee they announced the following hearing notice, “Full Committee Hearing with Fed Chair Powell; Oversight & Investigations Subcommittee Hearing on Biden Administration’s Wasteful Spending and Regulatory Overreach”

Powell’s testimony will be followed by the Labor Department’s nonfarm payroll jobs report on Friday, March 10. According to (Financial Advisor), two Federal Reserve policymakers cautioned that the recent stronger-than-expected jobs report could push them to raise interest rates by more than previously expected. This is one of the primary reasons that next week’s jobs report, one of the last critical reports used by the Federal Reserve in their decisions for the upcoming March FOMC meeting will be key.

The last major report to be released before the FOMC meeting is the CPI inflation index which will be released on March 14. These events most certainly will have a strong impact on the market sentiment of investors.

The dollar continues to drive gold pricing and traders now add to daily gains

For the last few weeks running, the dollar has been a primary driver of gold prices. Up to today’s market action in which the $20 gain in gold futures is a combination of both dollar weakness and traders buying the precious yellow metal higher. As of 3:52 PM EST gold futures basis the most active April contract is up $20 or 1.08% and fixed at $1860.50. Unlike recent price changes, today’s advances are almost an equal combination of dollar weakness and bullish market sentiment by traders. A little over half of today’s gains are a direct result of traders with bullish sentiment bidding gold prices up with the dollar accounting for a little under half of today’s move.

The screen print above is of the Kitco Gold Index (KGX) taken just before 4 PM EST with spot gold fixed at $1855 after factoring in today’s gains of $19.10. It clearly illustrates that the majority of today’s gains or 62% was the result of buying in the markets, with the remaining 42%, or $7.70 a direct result of dollar weakness.

Gold approaches a key and critical price point the 50-day Moving Average

Today’s dynamic gains have taken gold futures within striking distance of the 50-day simple moving average which is currently fixed at $1871.70. This could serve to be a technical resistance point where short-term traders pull profits. However, a strong close above that price point would technically confirm that bullish market sentiment defines the short-term outlook for gold prices.

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Wishing you as always good trading,

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.