Gold hovers just below $4,600 an ounce as traders wait out Fed Chair Kevin Warsh's first Jackson Hole address on Friday, having erased early gains in a flat Thursday session. The metal has still gained more than 16% since the start of August, though sticky inflation data has left the Fed's September rate path split.
Gold traded virtually unchanged on Thursday, slipping back below $4,600 an ounce after erasing early Asian-session gains, as traders avoided directional bets ahead of Fed Chair Kevin Warsh's first Jackson Hole address as chair on Friday.
Spot XAU/USD sat slightly below $4,600, while December futures opened at $4,650, down 0.1% against Wednesday's close, before trading $4,648.90. Gold had settled Wednesday at $4,593.74, down 1.38% on the session — its first close below $4,600 in three sessions.
Gold's August Rally Stalls at Resistance
Tuesday's session pushed gold to $4,696.20 intraday, its highest level since May 14, before the rally lost momentum and price eased back to $4,620 by the close. The metal has still gained more than 16% since the start of August, its best monthly performance since January. Bullion is also on track for a weekly rise of more than 1%, buoyed partly by signs the Fed may hold rates steady in September rather than lift borrowing costs to fight energy-driven inflation.
Inflation Data Splits the Rate Outlook
Wednesday's inflation print complicated rather than resolved the picture. Headline PCE rose 3.7% year over year. Core PCE, which strips food and energy, held at 3.3% annually, keeping the Fed's interest rate path uncertain. Markets now price roughly a 60% chance the Fed leaves rates unchanged in September, down from 64% before Wednesday's data, a shift that tracks closely with gold's pullback from Tuesday's high.
Treasury Buybacks Fuel the Debasement Trade
The Treasury's move to double its buybacks of longer-dated debt last week was the most powerful input into August's gold rally, ahead of the inflation data. According to Trade Nation senior market analyst David Morrison, gold has developed a "strong inverse relationship" with the US dollar. ANZ said the Treasury's actions have helped sustain the so-called debasement trade, in which investors buy gold as a hedge against a weaker dollar from persistent deficits and heavy borrowing.
Warsh, who has stressed he will not offer the detailed forward guidance some predecessors gave, may still address how monetary policy interacts with government bonds when he speaks Friday, with the September rate decision three weeks away.
Sources: Investing.com Commodities Analysis & Opinion, Investing.com Commodities & Futures News
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