Gold slips as Fed chief Warsh's Jackson Hole speech looms
- Spot gold fell 0.5% to $4,576.30 per ounce
Gold prices slipped as markets awaited Fed Chair Warsh's Jackson Hole remarks, with potential hawkish comments and rising rate hike expectations weighing on the non-yielding asset.
- Anticipated hawkish remarks from Fed Chair Warsh.
- Market expectations for US interest rate hikes.
- Gold's appeal in a high interest rate environment.
Gold slipped on Friday as market participants awaited closely watched remarks from Federal Reserve Chair Kevin Warsh at the Jackson Hole symposium.
Spot gold fell 0.5% to $4,576.30 per ounce by 0157 GMT after hitting a more than three-month high earlier this week following the US Treasury’s announcement of support measures for long-duration bonds. US gold futures eased 0.8% to $4,629.00.
The case for Warsh to lean hawkish is greater than the case for him not to, and that could see gold retreat further from its cycle highs in the near term, said Matt Simpson, a senior analyst at StoneX.
“But I suspect any such dip will be viewed favourably by bulls who missed out on the first phase of the rally - and are keen to have another crack at $5,000,” he said.
Fed officials shared their concerns about the U.S. inflation landscape on Thursday, as central bankers gathered in Jackson Hole.
Their comments came a day after data showed that the Personal Consumption Expenditures price index, the Fed’s main inflation gauge, stood at 3.7% in the 12 months through July.
Fed Chair Warsh is scheduled to speak later in the day.
Traders see a 33.9% chance of a US rate hike in September and a 74% chance by December, according to the CME FedWatch tool.
Despite its role as an inflation hedge, gold tends to lose appeal in a high interest rate environment as it offers no yield.
Gold remains supported by improving participation in exchange-traded funds and futures, along with concerns over US fiscal credibility and continued official-sector buying, though risks of a consolidation persist, OCBC precious metals strategist Christopher Wong said in a note.
“We remain constructive (on silver), though a cleaner extension higher likely requires renewed weakness in yields, US dollar and a decisive break above the $70.60-$72 resistance area,” he said.
Spot silver fell 1% to $68.54 per ounce and palladium declined 0.8% to $1,339.84.
Platinum was down 0.6% at $1,834.83, on track for a weekly loss.