The global gold market is in a volatile state following statements from the Chairman of the US Federal Reserve Jerome Powell during his speech at the Jackson Hole Forum on Friday before the heads of central banks.
Powell gave almost certain indications that the US Federal Reserve is heading towards reducing interest rates during its September meeting.
He announced that it is expected to reduce interest rates gradually, and that the value of the reduction will remain subject to the weekly reports issued on market data – considered relatively mixed so far, still within the limits of the scenario set.
The head of the Jewelry and Gold Division at the Federation of Egyptian Chambers of Commerce Hany Milad said that, “There is no doubt that Powell’s statements were in line with many expectations during the past period.”
“This means that the price of gold is likely to head strongly towards further increases during the coming periods, and may achieve other record peaks or even break the psychological barrier for gold,” he explained.
Milad said that: “There is no doubt that this will be reflected in the Egyptian market and the price of gold, but we will not be able to accurately predict the rates that the price of gold may reach in the local market due to the link between the price of gold and the exchange rate of the US dollar against the Egyptian pound, geopolitical conditions, and the percentage of local demand for gold versus the percentage of supply.”
“It has become certain that the global price of gold is heading towards an increase in the coming days after Powell’s statement, which indicates that the point of decline that we are at now due to profit-taking operations at the time of closing the market on Friday evening is a suitable point for buying for those who want to buy,” he stressed.
Powell indicated that if inflation continues to move horizontally in the coming months, this will be consistent with further interest rate cuts.
He added that the monetary policy is still somewhat restrictive and will remain so for a while even with interest rate cuts, advising against anticipating events and jumping to expected results.
Edited translation from Al-Masry Al-Youm
