While gold dropped lower this week after a statement by the Chairman of the Federal Reserve, the way the metal traded makes Peter Hug bullish.
Hug is global trading director of Kitco Metals. He spoke to Kitco News on Thursday after Federal Reserve Chair Jerome Powell gave a much anticipated speech at the annual Jackson Hole central bank summit.
Powell said that the U.S. central bank will target average inflation and put emphasis on “broad and inclusive” employment. Hug said Powell’s qualified statements on inflation caught the markets off guard and led to the sell-off. However, gold quickly found a floor.
“Gold has now tried three times to break under $1,900 ounce and each time on an intra-day basis it has always managed to close above that $1,922-$1,924 support level. So from a technical perspective, I think gold is still healthy,” said Hug.
Hug said conditions are positive for gold due to the amount of fiscal support provided by banks.
“The macro picture has not changed. [Every] central bank in the world has got their foot on the pedal, and I don't think they're going to take their foot off the pedal probably until the end of 2021,” said Hug.
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