Gold's Rally Ends Abruptly After Hawkish Jackson Hole Speech
Gold's week-long rally came to an abrupt end on Friday after Fed Chairman Kevin Warsh delivered a more hawkish-than-expected keynote address at the Jackson Hole Economic Symposium.
The seven-session streak of consecutive higher highs, which saw gold clear the 38.2% Fibonacci retracement at $4,692 and briefly touch the 50% level at $4,900, was undone in a single session as December gold futures plummeted $150.70, or 3.24%, to close at $4,504.10.
The technical chart had been looking strong, with gold having absorbed previous resistance levels and moving averages without issue. However, the hotter-than-expected Personal Consumption Expenditures report for July, which strengthened the dollar and pressed gold lower on Wednesday, may have been a warning sign that the rally was due for a correction.
The bulls still have reason to be optimistic, as the fundamental thesis of rising debt, sticky inflation, and a Fed with limited room to maneuver remains intact. The technical picture has been reset, but the targets of $4,692 and $4,900 remain in place.