Gold prices were steady on Thursday, with spot gold little changed at $4,590.21 per ounce by 1107 GMT, after settling 1.4% lower on Wednesday. U.S. gold futures fell 0.2% to $4,643.20. The market's caution stemmed from investors awaiting Federal Reserve Chair Kevin Warsh's speech at the annual Jackson Hole symposium on Friday. Analysts, like Hamad Hussain of Capital Economics, noted a "wait-and-see mode" among investors, anticipating Warsh's roadmap for returning inflation to the Fed's target and the bond market's role in that strategy.
The recent rally in gold, which saw prices hit a three-month high earlier in the week, was primarily driven by renewed dollar-debasement concerns following the U.S. Treasury's move to ramp up buybacks of older long-dated bonds. However, expectations for a September U.S. rate hike have decreased to 36%, though there's still a 72% chance of a hike by December, according to the CME FedWatch Tool. Gold tends to lose its appeal in a high-interest-rate environment as it does not yield interest.
Data released on Wednesday indicated that the U.S. Personal Consumption Expenditures Price Index increased 3.7% in the 12 months through July, unchanged from June. This figure was slightly above the 3.6% forecast by economists polled by Reuters. Markets are keen to see if Warsh will provide clearer guidance on the Fed's inflation reaction function, especially after the July PCE print kept the central bank's 2% target in focus. A vague or "counterproductive" speech from Warsh, similar to his remarks after the most recent FOMC meeting, could reignite debasement fears and support gold prices, according to Hussain. Other precious metals saw mixed performance, with spot silver gaining 0.4% to $68.34, platinum falling 0.3% to $1,824.18, and palladium losing 0.8% to $1,318.50.
