6 days ago
Gold Tops $4,600 as Investors Weigh Fed Path
Gold prices stayed above $4,600 while investors watched for clues about future interest rates.
One market update said gold fell after reaching a three-month high, while another later update said it gained during New York trading.
Gold is still about 14% higher this month.
Investors have bought gold partly because they are worried about government debt, budget deficits and a weaker dollar.
Gold funds also received a large amount of new investment last week.
People are waiting for Kevin Warsh to speak at the Jackson Hole meeting on Friday.
They also want to see a US inflation report called the Personal Consumption Expenditure Index.
Higher interest rates can make gold less attractive because gold does not pay interest.
Analysts said high energy prices and continuing inflation could slow gold’s gains.
Gold traded around $4,600 an ounce as investors assessed the Federal Reserve’s likely interest-rate path before Jackson Hole.
Gold remains up about 14% this month, partly after unexpected United States Treasury intervention in the bond market.
Gold-backed exchange-traded funds added more than 28 tons last week, their largest weekly increase since January.
Kevin Warsh is scheduled to deliver his first major speech as Federal Reserve chairman at Jackson Hole on Friday.
Analysts cited elevated energy prices and persistent inflation risks as reasons gold’s rally may have limited near-term upside.
- Who
- Gold investors, Federal Reserve Chairman Kevin Warsh, Federal Reserve Bank of Boston President Susan Collins, and TD Securities analysts Ryan McKay and Bart Melek.
- What
- Gold traded above $4,600 as investors assessed the Federal Reserve’s interest-rate outlook and the metal’s recent rally.
- Where
- Gold was quoted in London and New York; the Federal Reserve speech will take place at the Jackson Hole symposium.
- When
- The reports describe trading on Thursday, with the Personal Consumption Expenditure Index due Wednesday and Warsh’s speech scheduled for Friday.
- Why
- Investors are seeking clues about inflation and future interest rates, while also using gold as a hedge against debt, budget deficits and a weaker dollar.
Arguments Supporting Further Gold Gains
Reasons for Near-Term Caution
Debt and currency concerns
Arguments Supporting Further Gold Gains
Unexpected United States Treasury intervention in the bond market renewed interest in gold as a hedge against budget deficits, a large debt pile and a weaker dollar.
Reasons for Near-Term Caution
The recent rally may have advanced too quickly for a renewed move to record highs, according to TD Securities analysts.
Federal Reserve policy
Arguments Supporting Further Gold Gains
If Warsh does not prepare markets for a September rate hike, investors may interpret his speech as dovish; lower borrowing costs generally support gold.
Reasons for Near-Term Caution
Inflation remains above the Federal Reserve’s target, which could increase the prospect of higher rates. Higher borrowing costs are typically a headwind for gold because it pays no interest.
Market momentum
Arguments Supporting Further Gold Gains
Gold moved above its 200-day moving average, and strong exchange-traded fund inflows indicated wider investor participation.
Reasons for Near-Term Caution
TD Securities analysts pointed to elevated energy prices and persistent inflation risks as factors that could limit short-term upside.
Key facts
- Gold price snapshots
- Gold was reported at $4,621.61 an ounce in London and later at $4,610.89 in New York.
- Conflicting daily moves
- One report said gold slipped 0.8%; another said it gained 0.4% during New York trading.
- Monthly performance
- Gold remained about 14% higher for the month.
- Exchange-traded fund flows
- Gold-backed funds tracked by Bloomberg added more than 28 tons last week, the most since January.
- Upcoming speech
- Kevin Warsh is scheduled to give his first major speech as Federal Reserve chairman at Jackson Hole on Friday.
- Inflation data
- The US Personal Consumption Expenditure Index is due Wednesday.
- Other metals
- Silver was quoted at $68.56 an ounce in London and $69.29 in New York; platinum and palladium were steady or higher.
Quotes
Liu Shiyao
Analyst at Chinese brokerage Zijin Tianfeng Futures Co.
“If Warsh’s speech does not lay the groundwork for a rate hike in September, then it will likely be interpreted by the market as dovish”
livemint.com
Ryan McKay and Bart Melek
TD Securities analysts who commented on gold’s rally and its short-term prospects
“Precious metals are finding comfort in this higher range, We caution this rally may be too early for a renewed run back to record highs”
livemint.com
Sources
Related news
Gold Falls Sharply as Fed Rate-Hike Bets Rise
Gold Climbs Above $4,600 as Dollar Debasement Fears Grow
Gold Hits Three-Month High Ahead of US Inflation Data
Gold Nears $4,400 as Traders Weigh Fed Rate Path
Gold Extends Five-Day Gain as Oil Drop Eases Inflation Fears
Gold Climbs Above $4,400 as Traders Eye US Inflation
Gold Surges Over 3% as Treasury Move Hits Yields
US Inflation Subdued, Easing Pressure on Fed to Hike Rates
Brent crude surges past $87 as US-Iran deal hits snag
Brent Nears $90 as Trump Demands Cloud Iran Deal Hopes