Even though that macro concerns and market jitters ahead of the Fed Chairman Ben Bernanke’s speech in Jackson Hole support the price of gold in early trading, Brent crude is still trading above 110 USD per barrel level. We do not expect Bernanke to deliver a promise of a further round of the quantitative easing today. Hence, risks for the price of oil are skewed to the downside in our view, especially if one bears in mind that the civil war in Libya has likely approached its end.
Worse than expected result of US Initial jobless claims stopped a sell-off of gold yesterday. The yellow metal managed to erase all losses in the afternoon and in the end posted about 1 percent gains. Now, gold is trading slightly above 1780 USD per troy ounce level.
Regarding today’s speech of Fed’s Ben Bernanke, we don’t expect the Fed President to herald a new high profile initiative to support the economy at this stage. He will keep the door open for more QE in case the economic outlook would worsen, but probably not much more than that. In such a scenario, investors in riskier assets might be disappointed which could in turn support safe-haven assets such as gold.