Gold intermarket: Fed and DXY driving the price

Gold has staged a modest rebound after the largest weekly decline since mid-July.

However, the US dollar is holding the precious metal and commodities back after the Fed speakers last week who were essentially advocating for a rate rise soon while Yellen explained that the economy has improved over the last few months. After Stanley Fischer, in an interview with CNBC, said Yellen’s speech was “consistent” with the possibility of two rate increases this year, the dollar rallied and has barely looked back since.

We have the monthly U.S. jobs report coming up at the end of the week and this will be highly scrutinized ahead of the FOMC towards the end of September. While Gold consolidates, the next move depends on the Fed and the value in the US dollar. However, as we head to US elections and further uncertainty, the Gold price could attract demand. For th mean time, more liquidity will enter the market as London re-opens after the bank holiday.

DXY highs point towards Gold at $1,310

The DXY has rallied from 94.14 to 95.55 while gold dropped from $1,358 to $1,318 and has staged a partial recovery to $1,327.85 so far. 96.89 was last month's high while gold was at $1,310 where support has been since late June business.