Gold traded above US$4,600 an ounce as investors turned their focus to the Federal Reserve ’s interest-rate path ahead of the annual Jackson Hole gathering.
Bullion swung between gains and losses on Thursday after snapping a five-day winning streak the prior day. United States economic data this week showed that inflation remained well above the Fed’s target, raising prospects for a rate hike, which is typically a headwind for the non-yielding precious metal .
Bullion is still up about 14 per cent this month, given fresh impetus by the U.S. Treasury’s unexpected intervention in the bond market last week. Efforts to control the cost of the U.S. debt pile have revived interest in the so-called debasement trade that helped power gold’s record-breaking rally last year, when investors bought the metal as a hedge to protect themselves from runaway budget deficits and a weaker dollar.
Investors will be seeking clues to the Fed’s approach to inflation when Kevin Warsh makes his first major speech as chairman of the central bank this week. The much-anticipated address on Friday at the Jackson Hole symposium offers Warsh an opportunity to counter criticism that he hasn’t been forthright with his views on the economy.
“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,” said Liu Shiyao, an analyst at Chinese brokerage Zijin Tianfeng Futures Co. Lower borrowing costs are typically supportive for precious metals, which don’t pay interest.
Gold gained 0.4 per cent to US$4,610.89 an ounce at 3:19 p.m. in New York. Silver was up 1.7 per cent at US$69.29 an ounce. Platinum and palladium advanced. The Bloomberg Dollar Spot Index was steady.
—With assistance from Robin Paxton, Jack Ryan and Yvonne Yue Li.