Gold Dips Below $4,400 But Wall Street Stays Unfazed Amid 'Policy Panic'

Gold prices dipped below $4,400 on Monday but quickly recovered to around $4,413. This move was largely attributed to Friday's stronger-than-expected August jobs report, which raised the odds of a September Federal Reserve rate hike.

Bank of America strategist Michael Hartnett called this phenomenon 'policy panic,' where policymakers actively defend certain levels, such as $4-a-gallon gasoline and a 160 dollar-yen exchange rate. Despite this intervention, Hartnett advises staying long on commodities and gold due to the underlying currency debasement.

Invesco's head of client solutions for Asia Pacific, Christopher Hamilton, noted that institutions are shifting their approach to gold from a short-term trade to a permanent allocation due to rising government debt loads. This shift is reflected in central banks' plans to add gold reserves over the next 12 months, with 45% aiming to increase their holdings.

JPMorgan's commodities team published a report warning of a 'rush for resources,' citing rising geopolitical tension and institutional investors' growing concern about market risks. Meanwhile, Russia's gold exports to Hong Kong reached a record high in the first seven months of this year, with nearly 100 tonnes shipped during that period.