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When it comes to the trend of gold and the US dollar index, the industry's attention is focused on today's Jackson Hole Global Central Bank Annual Meeting. The market expects the meeting to release information about interest rate cuts. Analysts believe that once there is a hint of a 50bp interest rate cut, the US dollar index may continue to be weak, while gold and US stocks are expected to continue to rise. The World Gold Council also pointed out that based on the average situation of gold in the past decade, gold prices will initially strengthen after the Jackson Hole Annual Meeting begins.

Today, spot gold continued to rise, returning to above the 2,500 mark, up 0.64% on the day. Gold has continued to strengthen recently. The World Gold Council's model shows that this is mainly driven by investors' increased expectations for the Federal Reserve's September rate cut, a significant decline in the US dollar and a decline in US bond yields. In addition, the substantial increase in COMEX net long positions and global gold ETF inflows also supported the upward trend of gold prices. Some institutions predict that the price of gold is expected to rise to $2,600 per ounce by the end of this year.

Focus on Jackson Hole Central Bank Annual Meeting

Many industry analysts believe that the highlight of today and this week is Powell's speech at the Jackson Hole Central Bank Annual Meeting at 22:00. The information about interest rate cuts released by the meeting will have an impact on the trend of gold and the US dollar index.

For example, UBS Wealth pointed out that the Jackson Hole Global Central Bank Annual Meeting will be held this Friday, and the market expects Federal Reserve Chairman Powell to send more signals about interest rate cuts in his keynote speech.

Jerry Chen, a senior analyst at Forex Capital, told Cailianshe that a rate cut in September is almost certain, but there is still uncertainty about how much the rate cut will be and the future path. If he only mentioned the prospect of a moderate rate cut (excluding or downplaying the possibility of a 50bp rate cut in September), it would only be in line with the current mainstream expectations, so it is difficult to bring additional benefits to the market, and the US dollar index may have an opportunity to rebound.

"But once there is a hint of a 50bp rate cut in September, the US dollar index may continue to be weak, while gold and US stocks are expected to continue to rise. This is equivalent to expressing the Fed's pessimism about the economic outlook," Jerry Chen added.

At the Ping An of China 2024 interim results conference today, Chief Investment Officer Deng Bin also said that overseas interest rate cuts are good news for the capital market. He predicts that there is a high probability that interest rates will be cut by 25 basis points in September and will be further cut by the end of the year.

How will the Jackson Hole Annual Meeting affect the trend of gold? The World Gold Council analyzed that based on the average situation of gold in the past decade, gold prices will initially strengthen after the Jackson Hole Annual Meeting, but will weaken as bond yields tend to rise a few weeks later. If Powell's remarks at the Jackson Hole Annual Meeting are too dovish, there is a risk that the market will overestimate expectations of future interest rate cuts.

"If expectations of rate cuts cannot increase further, the US dollar index is expected to find support near the 100 mark, which is the previous low and the 200-week moving average. At the same time, the RSI indicator, which is about to enter the oversold area, also suggests the possibility of a short-term stop in the decline. However, after falling below the rising trend line since 2021, the overall trend of the index has turned downward. If it further falls below the above-mentioned key support, it may test the 96 line," Jerry Chen predicted for the trend of the US dollar index.

Gold returns to 2500, and is expected to rise to 2600

In fact, gold has been strengthening in recent times. Today, spot gold continued to rise, returning to above the 2,500 mark, up 0.64% on the day. The recent market fluctuations are mainly affected by the expectations of the Fed's policies, especially the market's expectations for the speech of Fed Chairman Powell at the Jackson Hole Annual Meeting.

UBS Wealth Office said this was mainly due to the weakening of the US dollar and the market's increased expectations for the Federal Reserve to cut interest rates in September. The US dollar index fell by about 0.7% last week, and has continued to fall for four consecutive weeks. In addition, the escalating tensions in the Middle East have also boosted demand for gold as a safe-haven asset.

"According to our weekly gold price return attribution model, the recent investors' increasing expectations for the Federal Reserve's September rate cut, as well as the significant decline in the US dollar and US Treasury yields have been important drivers of the upward trend in gold prices," a person from the World Gold Council told Cailianshe reporters. At the same time, the substantial increase in COMEX net long positions and the significant improvement in global gold ETF inflows have strengthened the upward trend in gold prices. In addition, high geopolitical risks have provided additional support for gold.

Jerry Chen believes that Powell's speech is expected to determine the direction of gold prices in the next few days. However, the overnight implied volatility of gold is only 14%, even lower than its weekly volatility, which means that Powell may not make a surprising statement tonight, and the gold price is likely to run between 2462.75-2506.75.

"The gold market is currently at a critical juncture. The interest rate cuts by central banks in developed markets and the resulting improvement in investment demand (such as net inflows into gold ETFs, as we have seen in recent months) are expected to support gold prices. Secondly, increased volatility in equity markets and rising geopolitical risks are expected to enhance investors' risk hedging demand, benefiting gold investment demand. But we must also see the risks, such as the slowdown in global central bank gold purchases," said a person from the World Gold Council, adding that investors should pay attention to the strategic role of gold in investor portfolios and its long-term performance.

UBS Wealth predicts that the price of gold is expected to rise to $2,600 per ounce by the end of this year, taking into account the strong buying demand from central banks and exchange-traded funds (ETFs). Gold will be an effective hedge against geopolitical risks, inflation and excessive deficits.