Gold slips as Fed chief Warsh's Jackson Hole speech looms

NEW YORK: Gold prices retreated on Friday as investors anticipated Federal Reserve Chair Kevin Warsh's speech at the Jackson Hole symposium. Spot gold fell 0.5% to $4,576.30 per ounce after reaching a three-month high earlier this week, following the U.S. Treasury's announcement of support measures for long-duration bonds. US gold futures also declined 0.8% to $4,629.00.

Matt Simpson, a senior analyst at StoneX, noted that the likelihood of Warsh taking a hawkish stance surpasses the chances of him not doing so, which could lead to further gold losses from its recent highs. However, Simpson believes that such a dip would be welcome by bulls who missed the initial rally and are eager to reach the $5,000 mark again.

Fed officials discussed their concerns about the U.S. inflation landscape on Thursday, the same day data revealed the Personal Consumption Expenditures price index stood at 3.7% for the 12 months ending July. Fed Chair Warsh is set to speak later in the day. Traders assess a 33.9% chance of a U.S. rate hike in September and a 74% probability by December, according to the CME FedWatch tool.

Despite gold's reputation as an inflation hedge, it tends to lose appeal in high-interest-rate environments as it does not yield any income. Gold continues to be supported by increased participation in exchange-traded funds and futures, along with concerns over U.S. fiscal credibility and official-sector buying, though the possibility of a consolidation remains, according to OCBC precious metals strategist Christopher Wong.

Silver and palladium also experienced declines, with spot silver falling 1% to $68.54 per ounce and palladium decreasing 0.8% to $1,339.84. Platinum saw a 0.6% drop at $1,834.83, on track for a weekly loss.