Yahoo Finance/Reuters/Brijesh Patel
Gold ticks higher as dollar slips; focus turns to Powell’s speech
Gold edged higher on Tuesday as the dollar dipped, with investors awaiting U.S. Federal Reserve Chairman Jerome Powell’s speech later this week, while a rally in equity markets limited bullion’s advance.
Spot gold was up 0.2% to $1,935.88 per ounce by 0335 GMT. U.S. gold futures gained 0.1% at $1,941.60.
On Thursday, Powell is due to talk at a gathering of central bankers in Jackson Hole, Wyoming, where he is expected to provide further clarity into the U.S. central bank’s efforts to revamp its approach to monetary policy.
“There is lot of focus on Jackson Hole symposium and Powell’s speech. I think the markets are reluctant to commit to a direction until that happens,” said DailyFx currency strategist Ilya Spivak, adding that gold prices are closely tracking movements in the dollar.
“We have seen a pullback in gold since beginning of the month around the sense that may be the Fed is not going to do much in terms of expanding its policy tool kit.”
The central bank has rolled out a wave of fiscal and monetary stimulus measures and cut interest rates to near zero to combat the economic toll caused by the pandemic, helping gold climb nearly 28% this year.
Lower interest rates decrease the opportunity cost of holding non-yielding bullion and weigh on the dollar, making gold cheaper for investors holding other currencies
The dollar index fell 0.1% against its rivals on Tuesday.
Widespread overconfidence is putting investors in a dangerous situation, Invesco’s Kristina Hooper warns
Invesco’s Kristina Hooper is worried overzealous investors are getting swept up in market momentum.
Whether it’s optimism or pessimism, she warns they’re becoming dangerously overconfident about where the market is heading next.
“People have become very set in their opinions. Some believe that there’s no end in sight to the stock market rally,” the firm’s chief global market strategist told CNBC’s “Trading Nation” on Monday. “Others believe that because we continue to hit new highs, things are getting quite frothy.”
Hooper observes that more and more investors, particularly on the retail side, are making risky one-sided bets off their polarized market views. She believes it’s a major trap that will result in deep losses.
“There’s some speculative fervor in markets, and it’s similar to what we’ve seen with bitcoin,” said Hooper, who added it also shows similar characteristics to the excitement surrounding the late 1990s tech bubble.
Hooper, who oversees $1.1 trillion in assets, views the rising popularity of no-fee online trading platforms such as Robinhood as creating more access to the markets and contributing to enthusiasm among retail investors.
“It’s always great to see more investors come into the market,” she said. “Just hopefully, we can remind them of important long-term investing tenets like diversification.”
CNN Business/Mark Zandi
How much longer until the US economy is back to normal? This new index shows we have a long way to go
We’re coming up on six months since Covid-19 turned the world upside down. We are adjusting, but few things feel normal. Certainly not in our daily lives. Most of us are wearing masks and social distancing, while our favorite sports teams play in empty stadiums and arenas. Our work lives are hardly typical, either. Lots of us are unemployed, and many of us fortunate to have jobs continue to work from home.
How far from normal are we? And how much progress are we making toward whatever “normal” will mean in the future? These are tough questions, but CNN Business and Moody’s Analytics have teamed up to take a crack at answering them with regard to the economy.
The US economy remains far from normal. That’s the bottom line. Based on the Back-to-Normal Index that we constructed, the US economy was operating at only 78% of normal as of August 19. “Normal” for our purpose is the economy as it stood prior to when the pandemic struck in early March. Economic activity nationwide is down by almost one-fourth from its pre-pandemic level — far from normal.
As bad as that is, it is substantially better than the darkest days of the pandemic in mid-April, when we were unsure how contagious or virulent the virus was. Nonessential businesses in much of the country were shut down, and most of us were sheltering in place. Our Back-to-Normal index hit its nadir of just 59% on April 17.