Gold Takes a Hit from Hawkish Fed Comments
The gold market has hit a speed bump after Federal Reserve Chair Kevin Warsh's hawkish comments at the Annual Central Bank Symposium in Jackson Hole, Wyoming. Warsh reiterated the central bank's commitment to bringing inflation down to its 2% target, stating that the price-stability mandate is more of a concern than the slowing labor market.
The gold market had been on a five-week winning streak, but the threat of a rate hike in September has added some volatility to the market. The CME FedWatch Tool shows a 55% chance of a rate hike next month, up from roughly 40% before Warsh's speech. Spot gold last traded at $4,473.80 an ounce, down 2.74% on the day.
Many analysts remain bullish on gold despite the recent downturn. David Morrison, Senior Market Analyst at Trade Nation, said that gold has become overbought over the last five weeks and still has plenty of upside potential for the rest of this year. He added that there are 40 trillion reasons to stay bullish, referencing government debt.