Gold Rises as Fed Outlook Mulled

Gold climbed toward $4,650 an ounce on Thursday, recovering most of the previous session’s losses as investors continued to weigh the outlook for Federal Reserve monetary policy ahead of a key meeting next month. Data released Wednesday showed US PCE prices rose more than expected in July and remained well above the Fed’s target, supporting a bullish outlook on interest rates. Investors now turn to Fed Chair Kevin Warsh’s speech at the annual Jackson Hole symposium on Friday, although he is not expected to offer clear guidance on the central bank’s September policy decision. Meanwhile, gold hovered near its highest level in three months as the so-called debasement trade continued to provide support, with investors hedging against risks of a US debt crisis and a weaker dollar. Elsewhere, China’s net gold imports through Hong Kong rose around 11% month-over-month in July, supported by stronger investment demand.

Gold prices fell toward $4,600 an ounce on Wednesday, on track to snap a three-session winning streak, as investors assessed fresh US economic data for clues on the Federal Reserve’s interest-rate path. The PCE price index rose 0.2% in July, above expectations for a 0.1% increase, while annual inflation reached 3.7% versus forecasts of 3.6%. Core PCE rose 0.2% month-over-month and 3.3% year-over-year, both in line with expectations. Consumer spending and income also came in slightly above forecasts. Separate data showed US GDP grew 1.5% in Q2, in line with the initial estimate, while durable goods orders rose 1.1% in July, beating expectations of 0.5%. Markets are now pricing around a 60% chance of the Fed leaving rates unchanged next month, down from 64% before the data, according to the CME FedWatch Tool. On the geopolitical front, Iran said it had resumed talks with neighboring Oman on managing the Strait of Hormuz, amid mounting economic pressure from US President Donald Trump.

Gold eased below $4,650 an ounce on Wednesday, but stayed close to three-month highs as investors awaited the latest US PCE price index report, the Federal Reserve’s preferred measure of inflation. Attention is also turning to Fed Chair Kevin Warsh’s speech at the annual Jackson Hole symposium on Friday, although he is not expected to provide clear guidance on the central bank’s policy decision in September. Investors continued to assess the US Treasury’s decision to double liquidity-support buyback operations for longer-dated notes and bonds, a move that helped push the dollar to a more than three-month low last week. Meanwhile, oil prices fell for a third consecutive session, easing inflation concerns and further supporting the bullish outlook for gold. Elsewhere, China’s net gold imports through Hong Kong rose around 11% month-over-month in July, supported by stronger investment demand.