30th August, 2016

Gold started the new week on a lower note, losing roughly $10/ounce at the opening of the US session and sinking to a five-week low at one point. By the close, however, it climbed back to finish roughly unchanged. We saw similar reversals in the rest of the group as well. Prices were pressured early on by a stronger dollar, but as the greenback lost ground over the course of the day, it forced some of the gold shorts to cover. However, we think that the dollar will continue to strengthen over the course of September, especially if US macro numbers continue to come in on the stronger side. (Among this week’s releases, Friday’s nonfarm payrolls report will be the most consequential). In addition, the dollar should also benefit from the fact that the Fed is intent on raising rates later this year, whereas other global central banks remains very accommodative.