Expectations For Jackson Hole Symposium: U.S. Dollar, Gold, and Fed Policy

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The annual Jackson Hole Symposium, a gathering of central bankers, economists, and financial institutions, will see its first ever virtual conference this week, and will likely set the tone for further U.S. dollar depreciation, said Gary Wagner, editor of TheGoldForecast.com.

“When you’ve got all of the major central banks getting together, they recognize the need for a long-term plan rather than what's the economy going to look like next year, they're actually looking out at the next decade. What that tells me is that they know that the crisis we're in is not going to be resolved overnight and so that's what's so critically important," Wagner told Kitco News. “I believe that it could have a detrimental effect on the U.S. dollar. If it does, we will see gold take off and that will indicate the bottom of this recent [gold price] correction."

Wagner noted that other central banks are also trying to depreciate their currencies, and markets will likely see a race to the bottom, although more downward pressure is expected of the U.S. dollar.

It is possible that the Federal Reserve may address the idea of moving their 2% inflation rate target, Wagner said.

“They have absolutely failed. First of all, their target of 2%, they’ve been running shy of that for years. I think they will address that and maybe have a more realistic number than 2% and make the target closer to what the actual numbers are,” he said.

However, it is unlikely that the Fed will move the Fed Funds Rate above 0%.

“I expect them to keep it near zero for as long as they need to and based upon that fact, that is going to increase the likelihood that the dollar will go down and then gold will go up,” he said.

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