Powell's keynote speech may be the next catalyst for gold and silver

Ole Hansen, head of commodity strategy at Saxo Bank, said gold and silver continued to trade in a narrow range, with traders waiting for the next catalyst for price action, and Federal Reserve Chairperson Jerome Powell's keynote speech in Jackson Hole on Friday was the next potential trigger.

"Some key US economic data have unexpectedly dropped in recent weeks, and stronger-than-expected PPI data have reminded markets that Trump's tariffs could still generate inflationary pressures," Mr. Hansen wrote on Tuesday. "While this data temporarily cooled expectations of a series of deeper or faster rate cuts, the market still sees a high probability of a 25 basis point cut at the September FOMC meeting, but the path thereafter remains uncertain."

"Therefore,Powell's speech at the Jackson Hole conference will be closely watched to see if its tone changes, particularly with regard to the Federal Reserve's tolerance for inflation as economic growth continues to slow。”

Hansen pointed out that speculation is rife about who might succeed Powell in May next year. US Treasury Secretary Vincent Bescent called for a 150 basis point rate cut.

"For gold, this uncertainty, combined with the summer holiday market, has translated into gridlock, leading to range-bound volatility, with prices hovering around $3,350 for the past three months on the back of solid investment demand," he said. "Silver also lacks momentum, supported by industrial demand and structural deficits, coupled with strong underlying technical aspects, but in the absence of new impetus, speculative bulls have shown a willingness to reduce the upside."

According to Hansen,Investors looking for potential triggers have now turned their focus to U.S. monetary policy and the dollar."Some developments may provide the spark needed to break the current impasse," he said.

He said,The first and most urgent is that "the Fed issues a clearer tone at Jackson Hole or other meetings"That could weigh on the dollar, push down real yields and provide favorable conditions for gold and silver."

He continued: "Weak labor force dataBoth the jobs data and the JOLTS data will strengthen easing expectations and support gold prices as the dollar weakens, especially if the Federal Reserve cuts interest rates despite rising inflation. "

He said,The third possible trigger is a rise in geopolitical risk, "Ukraine and the Middle East can both reintroduce hedging premiums in a short period of time."

Mr. Hansen said that while gold and silver remained range-bound while waiting for a catalyst, "both markets retain the underpinnings of liquidity and structural demand, with central banks and industrial users continuing to absorb supply".

He concluded: "The next move higher may require a macro trigger, most notably a dovish signal from the Federal Reserve, weaker U.S. data, or a geopolitical shock.Until then, it looks like gold and silver will remain range-bound and traders will just have to wait for volatility to return. "

Daily chart of spot gold, source: Internet

Beijing time on August 20 at 11:55 spot gold, quoted at $3317.95/ounce