Gold Prices May See Further Downside Before Jackson Hole
Gold prices have been consolidating between $3,990 and $4,160 over the past few weeks, supported by international and domestic political issues as well as technical chart points. However, CPM would not be surprised to see gold continue to trade sideways in August due to market jockeying for positions before the Kansas City Fed's Jackson Hole conference.
The Japanese yen has come under increased pressure, leading the U.S. Treasury and Bank of Japan to engage in large-scale currency support efforts. This temporary bandage does not address long-term economic reforms, but it sends a message supportive of investor demand for gold.
CPM is tempted to issue a Stand Aside ultra short term recommendation due to the current status quo, but feels that short-term downside opportunities may outweigh potential upward pressures on gold prices over the next two weeks. The firm continues to expect gold prices to rise beyond August.