Gold shrinks from new record as investors look ahead to Jackson Hole

Gold pared gains after hitting another record as traders look ahead to a speech by Federal Reserve Chair Jerome Powell later this week.

Bullion climbed to as high as $2,531.75 an ounce, taking this year’s gain to more than 22%, before giving up some of the advance. Powell’s address on Friday at the annual Jackson Hole symposium in Wyoming will be closely analyzed for clues about the central bank’s thinking on widely expected rate cuts — often seen as positive for non-interest bearing gold.

“Gold remains in record-setting mode ahead of Powell’s Jackson Hole speech,” Ole Hansen, head of commodity strategy at Saxo Bank A/S, said on Tuesday. “The main driver is the current positive momentum and limited selling appetite basically leaving the path of least resistance to the upside.”

Traders will also be monitoring other US reports due this week, including jobless claims figures on Thursday, which could inform the Fed’s plans. 

Gold’s rally has also been supported by robust purchasing by central banks as well as haven demand amid ongoing conflicts in the Middle East and Ukraine. There’s also been healthy buying of physical bars in the over-the-counter market.

“We expect the gold price to continue to rise in the first half of 2025 due to further Fed interest rate cuts, a US inflation rate that remains above target and a weaker US dollar,” Commerzbank AG commodity analyst Carsten Fritsch wrote in a report. That said, the bank doesn’t “expect gold to make any further gains for the time being.”

UBS Global Wealth Management’s Wayne Gordon is also bullish about the yellow metal’s prospects, saying prices are heading toward $2,700 an ounce by around the middle of next year. 

Still, there are signs that gold’s stellar run may now be weighing on demand in China, after a report showed last month’s imports fell to the lowest since May 2022.

Spot gold rose 0.4% to $2,513.70 an ounce by 11:37 a.m. in New York. The Bloomberg Dollar Spot Index and US 10-year Treasury yield were lower. Palladium and platinum slipped while silver gained.