Risk around The Jackson Hole Symposium has seen gold investors with relatively short horizons scaling down positions. And a vaccine breakthrough could be a potential game-changer if it allows the global economy to return to business as usual.

The gold investment case remains robust but unusual holders and competition from multiple financial products will ensure higher volatility.

If there is ever something of a known in economics, it is the Fed funds rate will be low for an exceptionally long time. Not to mention, the Fed has made it exceedingly clear that it will continue its current easy policy well into the recovery.

The Fed is not leaving the party anytime soon as the markets further bifurcate the economy into haves and have nots.

Because Fed funds rates will be hugging 0% for as far as the eye can see, 2-5 year yields will remain depressed, so we should expect real rates to remain negative for several years and will likely shift profoundly negative as the global economy move on a steady upward path out of the coronavirus recession. Not only the standard recipe for dollar weakness but higher gold.

Gold’s Phoenix will rise again, but the yellow metal will need some help for higher inflation break-evens or renewed US dollar pressure.

Gold and the dollar could consolidate within current ranges this week if no explosive headlines cloud the short-term horizon.

US Covid-19 case counts have steadily improved, primarily reflecting the easing of outbreaks in the Sun Belt. Still, case growth has picked up elsewhere, including continental Europe and parts of Australasia.

The better US trends may not continue through school re-opening and into autumn months as social activities move indoors, but the drop in the US curve could reduce pessimism around domestic growth over the short-term.

The Republication National Convention starts this week and could be US dollar supportive if Trump narrows his deficit in the polls as the view that a Biden Administration would raise US corporate tax rates has likely weighed on the greenback. Or even if President Trump makes significant new announcements on US policy toward China.

Gold markets analysis and insights from Stephen Innes, Chief Global Market Strategist at AxiCorp