UNITED STATES August 19 2016 10:52 AM
NEW YORK (Scrap Register): HSBC looks for US dollar weakness and says this should be supportive for gold. The greenback will be a key determiner of gold direction, and the dollar in turn will be influenced by Fed monetary policy.
The HSBC foreign-exchange team looks for the dollar to weaken as the Fed debate takes on an increasingly dovish tone in the run-up to the Jackson Hole economic symposium on Aug. 26.
At this event, markets will be focused on the tone of Fed Chair Janet Yellen’s speech. While minutes of the last Fed meeting show a lively debate about the appropriate pace of tightening, if Yellen’s speech dwells on the issue of a progressively lower natural interest rate, then the dollar will likely continue to weaken, according to the FX team. This would be positive for gold, HSBC added.
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