TLDR
- Gold traded flat around $4,600 per ounce on Friday ahead of Fed Chair Kevin Warsh’s speech at Jackson Hole
- Gold hit a three-month high near $4,700 earlier this week, driven by U.S. fiscal policy concerns
- Gold is on track for its biggest monthly gain since 1999, up nearly 14% in August
- Markets are pricing a 34% chance of a rate hike in September and 74% by December
- Silver, platinum, and copper also edged higher on Friday
Gold prices held steady on Friday as investors waited for Federal Reserve Chair Kevin Warsh to speak at the Jackson Hole economic symposium.
Spot gold traded at around $4,600 per ounce, while U.S. Gold Futures fell slightly by 0.3% to $4,651.41. The metal had reached a three-month high near $4,700 earlier in the week.
Despite a small pullback on Friday, gold is still on track for a marginal weekly loss after three straight weeks of gains.
A Big Month for Gold
August has been a strong month for bullion. Gold has gained nearly 14% this month, putting it on track for its biggest monthly gain since 1999.
The rally was fueled in part by a surprise move from the U.S. Treasury to support longer-dated bonds. That move revived the so-called debasement trade, which helped push gold to record highs last year.
Bullion-backed exchange-traded funds tracked by Bloomberg added more than 28 tons last week, the most since January. A further 20 tons were added in the days that followed. Central banks have also stepped up gold purchases.
Gold also benefited from a softer U.S. dollar and lower yields, which reduce the cost of holding the non-yielding metal.
Rate Hike Fears Weigh on Outlook
The Federal Reserve kept rates unchanged in July, but three officials voted in favor of a quarter-point hike. That split has kept markets on edge.
The Fed’s preferred inflation measure, the personal consumption expenditures index, rose 3.7% in the year through July. That reading has added to expectations the Fed could raise rates before the year is out.
According to the CME FedWatch tool, markets are pricing a 34% chance of a rate hike in September and a 74% chance by December.
Higher interest rates tend to hurt gold because it pays no interest, making it less attractive compared to other investments.
At Jackson Hole on Thursday, two central bank officials said rates were not currently slowing the economy enough. But Fed Bank of Boston President Susan Collins said rates are “mildly restrictive.”
All eyes turned to Warsh’s speech, scheduled for 10 a.m. ET Friday. It is his first major address as Fed chair and is being watched for clues on where rates are headed.
Other Metals
Silver rose 1.3% to $70.11 per ounce. Platinum climbed 1.8% to $1,882.60 per ounce. Copper futures on the London Metal Exchange edged up 0.4% to $14,338.15 a ton.
Gold remains near $4,600 as investors wait to hear how Warsh plans to handle inflation and interest rates in the months ahead.
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