22 June 2021

Gold Flat as Markets Await Powell Inflation Address to U.S Congress

Gold traded relatively flat this week (between the $1,790 and $1,760 mark), after last week’s tumble from $,1860/oz. The 200-day moving average is above at the $1811 level and will offer resistance if the gold price gets there. If gold breaks above it, it would be a very bullish sign for gold. 
The Dollar Index has attempted to take back ground after falling from its March peak this year of 93.4, with the greenback moving up to 92 (1.5%) from 89 in the past 5 days. This came as a result of the U.S Fed ‘talking about talking about’ taking their foot off the money printing pedal last week – the markets overreacted fiercely last week.
Investors are today awaiting Fed Chairman Jerome Powell’s speech on inflation concerns to Congress later this afternoon. Tom Graff, head of fixed income at Brown Advisors, said that “I expect Powell will try to reverse some of the damage last week’s Fed meeting did,”
Investors will also keep an eye on the debt and borrowings of the developed market economies. In the U.S, the government has borrowed $13 trillion. These borrowings have raised the U.S debt to beyond $23 trillion. However, the economy increased by only $5.1 trillion in the past 10 years. GDP has expanded less than 40% while the national debt has increased by over 120%. 
This week, Italian Prime Minister Mario Draghi also called for more economic stimulus in European countries to ‘help bring growth back.’ He tried to quell inflation concerns, stating, ‘We must also reassure investors that we will return to fiscal prudence as soon as the recovery is self-sustained.’
 The yellow metal was last seen trading at $1,777/oz.

Jaco Lups