Gold Price Corrects to $4,620 Ahead of Key US Inflation Data
Gold price (XAU/USD) has corrected to near $4,620 during the European trading session on Wednesday. The precious metal's rally paused after reaching a fresh three-month high of $4,697 the previous day.
Investors are turning cautious ahead of the US Personal Consumption Expenditure Price Index (PCE) data for July at 12:30 GMT and Federal Reserve Chairman Kevin Warsh's commentary at the Jackson Hole Symposium. The PCE inflation data is closely tracked by Fed officials, with expectations that it remained steady at 3.3% Year-on-Year (YoY), while monthly figures rose at a 0.2% pace, faster than June's reading of 0.1%.
Signs of US inflationary pressures remaining steady might ease the Fed's interest rate hike expectations further, which receded significantly this month following the release of weak Nonfarm Payrolls (NFP) data for July. Strategists at DBS flag Warsh's Jackson Hole speech as a key event, noting that it is 'viewed more as a credibility event rather than a rate-signalling one.' They warn that 'Warsh faces a difficult balancing act: defending the Fed's independence and price-stability mandate while providing greater clarity on the Fed's reaction function without abandoning his preference for less forward guidance.'