Gold Price Forecast: XAU/USD to hit $1900 as Powell is all-in on transitory inflation – TDS

Chair Powell broadly did not express concerns about inflation in his Jackson Hole remarks. No evidence that expectations of inflation are being de-anchored from the 2% level. This narrative should be positive for gold, in the view of Bart Melek, Head of Commodity Strategy at TD Securities.

Powell’s narrative emphasising transitory nature of inflation a positive for XAU/USD

“Seems that Chair Powell will run the economy hot to achieve full employment, which may take a while longer particularly for disadvantaged social groups. This likely means that any taper will be gentle and policy rates will remain very accommodative for quite a while.”

“With no imminent attack on inflation, nominal rates have no reason to spike and inflation expectations may well edge higher. The resulting firmly negative rates should be a positive for gold.” 

“A technical move to the low $1,830/oz seems in the cards in the not too distant future, with even higher levels ($1,850-$1900/oz) as we move into early 2022 and taper is well managed.”