Warsh's Jackson Hole Speech Could Move Gold More Than Any Inflation Print

The Federal Reserve's upcoming Jackson Hole symposium is just 14 days away, and its importance cannot be overstated for gold investors. In a recent press conference after the July 29 FOMC meeting, Federal Reserve Chair Kevin Warsh emphasized that his speech at Jackson Hole will 'frame the big questions' rather than provide near-term guidance.

Warsh also noted that the constant cycle of meetings and press conferences creates a tendency to get caught up in debating quarter-point moves rather than the structural forces shaping the next decade. He added that the Fed is 'not constrained by market prices,' which implies that the central bank will act independently of what markets are pricing.

These statements have significant implications for gold investors, particularly given the recent pullback in gold prices to around $4,356 per ounce. However, it's essential to note that this decline follows a week of cooling inflation data, which has driven September rate-hike odds sharply lower. The CME FedWatch tool shows that the implied probability of a September hike has dropped from 54% last week to approximately 39% today.

The University of Michigan inflation expectations survey on August 14 and the July PCE release in late August will also shape the hawks' case heading into Warsh's speech. A close above $4,450 would suggest markets are settling on a September hold as the base case.