Gold slips as US Fed chair’s Jackson Hole speech looms
The case for Warsh to lean hawkish is greater than the case for him not to
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GOLD slipped on Friday (Aug 28) as market participants awaited closely watched remarks from US Federal Reserve chair Kevin Warsh at the Jackson Hole symposium. Spot gold fell 0.5 per cent to US$4,580.19 per ounce by 0438 GMT. It touched a more than three-month high of US$4,696.18 on Tuesday, following the US Treasury’s announcement of support measures for long-duration bonds. US gold futures eased 0.7 per cent to US$4,632.40.
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 US$5,000,” he said.
US Fed officials shared on Thursday their ongoing concerns about the US inflation landscape, as central bankers gathered in Jackson Hole, Wyoming, for the Kansas City Fed’s closely watched annual economic symposium.
The officials spoke a day after a report showed that the Personal Consumption Expenditures Price Index, the central bank’s main inflation gauge, stood at 3.7 per cent in the 12 months through July.
US Fed chairman Kevin Warsh is slated to speak later in the day at the event.
Traders see a 33.7 per cent chance of a US rate hike in September and a 74.2 per cent 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.
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“We remain constructive (on silver), though a cleaner extension higher likely requires renewed weakness in yields, US dollar and a decisive break above the US$70.60-US$72 resistance area,” he said.
Spot silver fell 0.6 per cent to US$68.85 per ounce and palladium declined 0.2 per cent to US$1,349.44. Platinum was down 0.3 per cent at US$1,840.78, on track for a weekly loss. REUTERS
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