Warsh Speech Looms Large Over Gold Price as Hawkish Fed Stance May Weigh

Spot gold has been consolidating after reaching a three-month high of $4,697 on August 25. The price surge was driven by reduced expectations of a Fed rate hike and a softer dollar. However, hotter-than-expected US inflation data could push the Fed to reaffirm its focus on price stability.

Federal Reserve Chair Kevin Warsh's speech at the Jackson Hole symposium is expected to provide crucial clues on the US central bank's policy path. A hawkish signal from Warsh could trigger further correction in gold towards the $4,500-$4,520 support zone.

The recent rally in gold has been driven primarily by receding odds of a Fed rate hike and the US nonfarm payroll report for June unexpectedly turning out to be disappointing.