Gold edged lower on Wednesday as traders positioned ahead of the U.S. Personal Consumption Expenditures report and Fed chair Warsh's first Jackson Hole speech. A drop in oil prices below $90 a barrel, tied to diplomatic progress in the Middle East, has offered the metal some support even as it looks set to end a three-week winning streak.
Gold prices edged lower on Wednesday as investors looked ahead to the release of key inflation data closely watched by the Federal Reserve. At 05:08 ET (09:08 GMT), spot gold fell 0.7% to $4,624.97 an ounce, while gold futures ticked down 0.3% to $4,680.51 an ounce.
The metal is on track to end a three-week winning streak, though a drop in oil prices below $90 a barrel has offered some support. Crude fell on reports of progress in diplomatic efforts to halt hostilities in the Middle East conflict.
Oil retreat offers gold some cushion
Iran and Oman held talks on creating a temporary joint maritime corridor that could allow some shipping through the Strait of Hormuz to resume, while a Russian news agency said the U.S. and Iran could announce a new ceasefire deal in the coming days. Lower oil prices matter for gold because energy costs feed into inflation. If oil prices rise sharply, the Fed may face greater pressure to keep interest rates elevated, which can weigh on bullion because gold does not pay interest, making it less attractive relative to yield-generating assets.
PCE inflation and Warsh speech ahead
Investors are now turning to two major catalysts for gold: the PCE report and Warsh's first major speech as Fed chair at the Jackson Hole symposium on Friday. These events, said David Morrison, Senior Market Analyst at Trade Nation: "could provide the catalysts for the next big move" in gold.
The PCE report, due before the opening bell on Wall Street on Wednesday, will likely offer fresh insight into inflation pressures. Month-on-month, the underlying core PCE price index is expected to accelerate slightly to 0.2% in July, compared with 0.1% previously. In the twelve months to July, the measure is tipped to equal June's pace of 3.3%.
Warsh's Jackson Hole address, meanwhile, could offer a clearer indication of how the Fed views the balance between persistent inflation and the broader economic outlook. Traders are looking for more clarity on when the Fed would be willing to adjust policy in response to inflation, though Warsh has stressed he does not want to outline exact forward guidance on borrowing costs.
Markets have lowered their pricing for a rate hike at the Fed's September meeting. Still, Boston Fed President Susan Collins warned in an essay that without more sustained disinflation, tighter policy would soon be appropriate. Collins is not a voting member of the FOMC, but analysts at Deutsche Bank flagged that they had previously pegged her as someone not supporting a 2026 hike, suggesting a September increase may still be live for some of the committee's centrists.
Source: Investing.com
Trading involves risk.
Risk Disclaimer
