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Gold falls below $4,600 as traders await Jackson Hole remarks
Core PCE held at 3.3% year over year in July, boosting the probability of a September Fed rate hike to 40% from 36% after the data.
Gold prices edged lower below $4,600 in early European trading on Friday, pulling back from a three month high as markets recalibrated expectations for additional Federal Reserve rate hikes, FXStreet reports.
The move follows in line US inflation data, with the core PCE Price Index holding steady at 3.3% year over year in July, according to the US Bureau of Economic Analysis. On a monthly basis, both headline and core PCE rose 0.2%, helping lift traders' September rate hike odds to 40% from 36% as measured by the CME FedWatch Tool.
Attention is now on Fed Chair Kevin Warsh's speech at the Jackson Hole Economic Symposium for fresh direction on policy. FXStreet notes that higher rates can reduce gold appeal because the metal does not pay interest, while the outlet also points to potential easing in oil driven inflation concerns if diplomacy improves prospects for reopening the Strait of Hormuz.
Oil related optimism could offer some support to gold, but the report highlights that a more hawkish tone from Warsh would be a key risk for bullion. Technically, XAU/USD is holding above its 100 day simple moving average and the 20 day Bollinger middle band, while the 14 day RSI is around 65, indicating positive momentum without extreme overbought conditions, FXStreet said.
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