Gold Retreats Ahead of Warsh's Hawkish Remarks at Jackson Hole
The price of gold slipped on Friday as market participants awaited the highly anticipated speech 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 reaching a more than three-month high earlier in the week following the US Treasury's announcement of support measures for long-duration bonds.
According to Matt Simpson, a senior analyst at StoneX, the case for Warsh to lean hawkish is greater than the case for him not to, and this could see gold retreat further from its cycle highs in the near term. However, Simpson suspects any 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.
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.