Market update: gold hits record high while markets await key insights from Jackson Hole Symposium

Jackson Hole Symposium focuses on monetary policy shifts

This year’s Jackson Hole Symposium, themed “Reassessing the Effectiveness and Transmission of Monetary Policy,” is scheduled for 22-24 August, with Federal Reserve (Fed) Chair Jerome Powell’s keynote speech on Friday as the highlight. Traders are anticipating that Chair Powell will signal the start of interest rate cuts in September.

Financial markets are currently pricing in nearly 100 basis points (bp) of rate cuts by the end of this year. With only three Federal Open Market Committee (FOMC) meetings left in 2024, and considering that the Fed typically moves in 25 bp increments, a 50 bp rate cut seems probable if market predictions hold true.

Implied interest rates and basis points chart

USD/JPY experiences volatile trading

The USD/JPY (大口） currency pair has seen significant volatility over the past month. After the Bank of Japan (BoJ) raised interest rates for the second time this year, USD/JPY fell by 20 big figures in three weeks. The pair then surged nearly 10 big figures due to a strong US dollar, but dropped again last Friday and today on a weaker US dollar.

The next resistance for USD/JPY is expected between 151.45 (the 200-day simple moving average) and just under 152.00, a prior horizontal resistance level that has turned into support. If the pair experiences a renewed sell-off, the focus will likely shift to 140.28.

USD/JPY daily price chart

Gold breaks resistance and hits new high

Gold has finally broken through a stubborn resistance area, reaching a fresh all-time high on Friday. Expectations of lower interest rates and concerns over potential escalation in the Middle East have contributed to a strong underlying bid for gold.

Support is currently seen at $2485 per ounce, followed by $2450 per ounce, as gold continues its upward price discovery.

Gold daily price chart

Market sentiment and positioning on gold

Retail trader data shows that 43.65% of traders are net-long on gold, with the ratio of traders short to long at 1.29 to 1. The number of traders net-long has increased by 11.99% from yesterday but is 13.24% lower than last week. Conversely, the number of traders net-short has risen by 5.76% from yesterday and 30.77% from last week.

Typically, a contrarian view to crowd sentiment is taken, and the fact that traders are net-short suggests that gold prices may continue to rise. However, positioning is less net-short compared to yesterday, but more net-short relative to last week, creating a mixed gold trading bias.

Gold client positioning chart

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