For most of the year, gold chooses its guiding star. In March, it was the US stock indices, the collapse of which forced investors to look for cash to maintain margins and sell precious metals. In April-July, XAU/USD quotes reacted sensitively to the Treasury bond yield, which rushed to historical lows. Finally, at the turn of summer and spring, the US dollar became the guiding star of gold. Rumors about its gloomy long-term prospects returned the precious metal to the $ 2000 per ounce mark.

When Jerome Powell talked about the Fed's transition to a strategy of targeting average inflation, it seemed that he had signed the "American" death sentence. Indeed, if the federal funds rate remains at 0.25% for the next few years, then the dollar's competitors will have a great opportunity to strengthen their positions as the Fed's rival central banks tighten monetary policy. PIMCO, a financial manager that manages $ 1.92 trillion in capital, believes that the US labor market will return to full employment no earlier than 2024. Only then will inflation move steadily towards the 2% mark.

Traditionally, gold is perceived as an anti-dollar, thus, the growth of XAU/USD in response to the speech of Jerome Powell seems quite logical. It would seem that the recovery of the "bullish" trend for buyers of precious metals will not be a problem, however, you need to understand that other central banks can follow the Fed, which allows the US currency to count on a correction.

Dynamics of gold and the US dollar

According to Commerzbank, to predict the future dynamics of gold, it is necessary to closely monitor the EUR/USD pair. The share of the euro in the structure of the USD index is 57%, thus, it is not surprising that its fall allows the dollar to straighten its shoulders. The reasons for this peak should be found in the first deflation in the Eurozone since 2016 and in the associated "dovish" rhetoric of the ECB. According to chief economist Philip Lane, the euro exchange rate against the US dollar is important for the European Central Bank, as it takes into account the forecasts for the European and world economies. In essence, we are talking about verbal intervention: the ECB can not close its eyes to the 12% rally of EUR/USD from the levels of the March bottom, which slows down inflation.

TD Securities believes that the precious metal expects months of consolidation. Let me agree with this opinion. Strong macro statistics on the States and investor concerns about the expansion of European QE, a hint of which may be made as early as September 10 at the ECB meeting, will keep the "American" afloat, contributing to the fall of the XAU/USD. However, the long-term weakness of the dollar limits the potential for gold correction. In the short term, the reason for its sales in the direction of $ 1915, $ 1905 and $ 1865 per ounce may arise in the event of an impressive increase in August employment outside the US agricultural sector.

Gold, the daily chart