Warsh's Jackson Hole Speech Sets Stage for Gold Price Reversal

Gold prices declined on Friday ahead of Federal Reserve Chair Kevin Warsh's speech at the Jackson Hole Economic Policy Symposium, where he is set to deliver the keynote address. The speech comes after July consumer-price data showed a 3.7% increase in the Personal Consumption Expenditures price index, the Fed's preferred inflation measure.

Warsh's speech has put gold's rate sensitivity in focus as investors await his assessment of inflation risks. The Fed faces a policy rate above its 2% inflation objective after the July PCE price index increased 0.2% from June.

CME FedWatch, which derives rate probabilities from 30-day federal funds futures, showed markets assigning roughly a one-third probability to a September rate increase ahead of Warsh's speech. Higher policy rates can weigh on gold because bullion does not pay interest.