Gold prices were steady on Thursday, with spot gold showing little change at $4,590.21 per ounce by 1107 GMT, after a 1.4% decline on Wednesday. U.S. gold futures also fell slightly by 0.2% to $4,643.20. This stability comes as markets are in a 'wait-and-see mode' ahead of Fed Chair Kevin Warsh's upcoming speech at the annual Jackson Hole symposium.
Investors are particularly keen to hear Warsh's roadmap for returning inflation to the Fed's target and his views on the bond market's role in this strategy. Hamad Hussain, a climate and commodities economist at Capital Economics, noted that if Warsh's remarks are vague, similar to his previous press conference, it could reignite fears of dollar debasement and consequently support gold prices.
The recent rally in gold prices, which saw them hit a three-month high earlier in the week, was partly fueled by renewed concerns about dollar debasement following the U.S. Treasury's move to increase buybacks of older long-dated bonds. However, gold's appeal typically diminishes in a high interest rate environment because it does not generate interest.
Recent economic data showed that the U.S. Personal Consumption Expenditures Price Index increased by 3.7% in the 12 months through July, matching June's figure and slightly above economists' forecast of 3.6%. Despite this, expectations for a September U.S. rate hike have decreased to 36%, though there remains a 72% chance of a hike by December, according to the CME FedWatch Tool.
By 1:54 p.m. EDT, spot gold had edged up 0.4% to $4,607.90 per ounce, and U.S. gold futures for December delivery settled 0.2% higher at $4,664. The U.S. dollar eased, making gold more affordable for international buyers. Bob Haberkorn, senior market strategist at StoneX, expressed bullishness on gold, citing strong demand from ETFs and central banks seeking an alternative asset to the dollar.
