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Gold slips more than 3% as Warsh defends 2% inflation goal
Comex gold for December dropped as much as 3.2% to $4,515.30 an ounce in New York after traders repriced roughly one-in-three odds of a September rate hike, a shift that weighed on bullion.
Gold prices fell sharply after Fed chair Warsh told the Kansas City Fed symposium that the central bank’s 2% inflation target is “firm and fixed” and that short-term interest rates remain the predominant tool to meet the mandate, according to Mining.com. Comex gold for December delivery fell as much as 3.2% to $4,515.30 an ounce in New York, swinging down from an overnight high of $4,688, and by early afternoon the most active contract was trading around $4,535.90, down 2.7% on the day.
Warsh’s remarks also pushed the dollar higher, and traders interpreted them as keeping expectations for a September rate increase in play. Markets priced roughly one-in-three odds of an increase next month, and higher rates are typically negative for bullion since gold does not pay interest, Mining.com said.
Warsh also appeared to push back against the US Treasury’s surprise bond-market intervention, describing unconventional policies as appropriate for genuine crises but otherwise something to use sparingly. The pullback arrived during the final days of a strong month: Mining.com reported bullion-backed ETFs added the most gold since January, the December contract traded above $4,700 earlier this week, and gold remained on track to finish August up about 11% and roughly 16% below its late-January record.
Silver declined even more, with Comex silver for December delivery dropping 4.1% to $67.34 an ounce, erasing a week of gains. Mining.com added that silver is still on track for a 16% August advance and a 71% gain over the past 12 months, while precious metals equities fell more broadly on Friday, including declines for Coeur Mining, Eldorado Gold, Hecla Mining, AngloGold Ashanti, and Equinox Gold.
Latest closeGold $4,666.20 ▲0.6%|Silver $68.61 ▼0.0%