GOLD TALKING POINTS

Gold extends the rebound from the 2018-low ($1160) amid the recent weakness in the U.S. dollar, and the precious metal may continue to gain ground over the coming days as it initiates a fresh series of higher highs & lows.

GOLD REBOUND VULNERABLE TO HAWKISH FED RHETORIC

The inverse relationship between gold and the greenback continues to take shape despite the growing spat between Turkey and the U.S., and the current environment may foster a larger recovery in the precious metal as there appears to be waning expectations for four Fed rate-hikes in 2018.

Lackluster data prints coming out of the U.S. economy may spark a further shift in market expectations as consumer sentiment unexpectedly wanes in August, but the FOMC Minutes and the Fed’s Economic Symposium in Jackson Hole, Wyoming may boost the appeal of the dollar should Chairman Jerome Powell & Co. insist that ‘the Committee expects that further gradual increases in the target range for the federal funds rate will be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective over the medium term.

It seems as though the FOMC will stick to its hiking-cycle as the central bank largely achieves its dual mandate for full employment and price stability, and a batch of hawkish comments may undermine the recent rebound in gold if Fed officials show a greater willingness to implement four rate-hikes in 2018.

Keep in mind, the IG Client Sentiment Report continues to show retail sentiment near extremes as 85.1% of traders remain net-long gold, with the ratio of traders long to short at 5.72 to 1. The number of traders net-long is 0.1% higher than yesterday and 13.4% lower from last week, while the number of traders net-short is 5.9% lower than yesterday and 14.4% higher from last week.