FX.co ★ Terrorist attacks in Afghanistan have raised the price of gold

The tragic events in Kabul, which claimed the lives of several dozen people, hit the stock markets yesterday, while the demand for safe haven assets increased. Gold has risen in price again.

August 26 was a black day for the Afghan capital. On Thursday, several explosions thundered in different districts of Kabul, from which, according to preliminary information, at least 100 people have already died. The ISIS terrorist group claimed responsibility for the incident.

The tense geopolitical situation in Afghanistan has changed the mood on the US stock market, which had been in a state of euphoria for 4 consecutive sessions before. Investors have once again turned their backs on risky assets, preferring safe financial instruments such as gold.

Also, the yellow metal was helped to rise by fresh statistics from the American labor market. Last week's data showed that the number of applications for unemployment benefits in the United States increased by 4 thousand and reached 353 thousand. This is more than the forecast of economists, who expected growth to 350 thousand.

Having received significant support, the main precious metal ended the session on the New York COMEX Exchange at $1,795.2. Quotes jumped by $4.20, or 0.2% compared to Wednesday, when they showed the strongest drop in more than 2 weeks (by 1%).

During yesterday's trading, the price of gold reached a maximum value of $1800.40. However, the bullion could not gain a foothold above the key mark, since several factors put downward pressure on them at once.

On Thursday, the yield of 10-year US bonds rose to 1.35% and held during the day at the maximum value for 2 weeks. Meanwhile, the dollar also showed positive dynamics. By the evening, its index jumped by 0.2%, inspired by the "hawkish" comments of representatives of the US Federal Reserve.

Yesterday, the president of the Federal Reserve Bank of Kansas City, Esther George, said that US economic growth has already made significant progress, which serves as a signal for the beginning of a reduction in asset purchases.

The head of the St. Louis Federal Reserve, James Bullard, seemed even more convincing. Speaking about the curtailment of measures, he hinted that the representatives of the central bank finally came to a consensus and began to develop a plan.

The words of J. Bullard helped to slightly strengthen the theory that at the Jackson Hole symposium, the regulator can announce the exact timing of the start of reducing monthly asset purchases, and they will be earlier. Such prospects are favorable for the US currency.

At the same time, there is another opinion that helps to strengthen gold. Taking into account the current risks of slowing economic growth due to the spread of the delta coronavirus, the Fed can simply indicate the need to curtail purchases in the future, without naming specific deadlines.

It can be recalled that the forum in Jackson Hole started yesterday and will last until tomorrow. The event will culminate with a speech by the head of the US Federal Reserve, Jerome Powell, which is scheduled for today. In anticipation of the comments of the chairman of the Federal Reserve, there is increased nervousness in the markets.

Now investors are hoping to hear hints about how the central bank is going to adjust its monetary policy: whether it intends to sharply raise interest rates to fight inflation, or gradually normalize the exchange rate.

ThinkMarkets market analyst Fawad Razaqzada is inclined to the second scenario. He believes that in the coming months, the pressure of temporary factors that accelerate inflation should weaken. For this reason, the regulator will not resort to emergency measures.

According to the expert, in this case, gold quotes will retain fundamental support, as a result of which they will be able to start a serious upward movement. In the medium and long term, F. Razaqzada sees the potential for the metal to grow to $2 thousand and even higher.