Gold Falters at Resistance as Warsh's Speech Reinforces Hawkish Sentiment
Gold's recent rally has stalled near resistance as the metal grapples with sticky US inflation, month-end flows, and Kevin Warsh's Jackson Hole speech. The US dollar gained strength following a strong Q2 GDP revision to 3.6%, real consumer spending rising to 3.4%, and company profits increasing 8.2%. These numbers have provided little reason for the Fed to show dovishness, with Warsh's speech expected to reinforce hawkish sentiment.
The PCE inflation report showed core PCE at 3.3% y/y, well above the Fed's 2% target. This has left gold vulnerable to a deeper near-term retracement as the US dollar remains strong. However, futures and options sentiment remains bullish, with net-long exposure trending higher among large speculators and managed funds.
Despite this, a move back towards 4,500 could be viewed as a gift by bulls, and a break above the May high would bring the 4,918 April high and 5,000 handle into focus. It's unlikely that gold will push straight to a fresh high without a significant USD selloff, which doesn't seem imminent given current data.