Gold traded around $4,600 per ounce on Friday as investors waited for Federal Reserve Chair Kevin Warsh to speak at the Jackson Hole economic symposium. Spot gold held near that level, while U.S. gold futures slipped 0.3% to $4,651.41. The metal had reached a three-month high near $4,700 earlier in the week.
August has been a very strong month for bullion. Gold has gained nearly 14%, putting it on track for its biggest monthly gain since 1999. The rally was supported by a softer U.S. dollar, lower yields, concerns over U.S. debt, and a surprise move from the U.S. Treasury to support longer-dated bonds. That revived the so-called debasement trade, which helped push gold to record highs last year.
Bullion-backed exchange-traded funds tracked by Bloomberg added more than 28 tons last week, the most since January, and a further 20 tons were added in the following days. Central banks have also stepped up gold purchases.
The Federal Reserve kept rates unchanged in July, but three officials voted in favor of a quarter-point hike. The Fed’s preferred inflation measure, the personal consumption expenditures index, rose 3.7% in the year through July. According to the CME FedWatch tool, markets are pricing a 34% chance of a rate hike in September and a 74% chance by December. Higher interest rates tend to reduce the appeal of non-yielding assets like gold.
At Jackson Hole on Thursday, two central bank officials said rates were not currently slowing the economy enough, while Boston Fed President Susan Collins said rates are “mildly restrictive.” Warsh’s speech was scheduled for 10 a.m. ET Friday and is his first major address as Fed chair.
Traders are watching key technical levels. Immediate support sits near $4,568 to $4,570, while resistance is around $4,670. A move above that could put $4,700 and then $4,782 in play. A break below $4,568 could send gold toward $4,500 and potentially $4,420. The Ultimate Oscillator reading was 47.62, leaving room for either another push higher or a deeper pullback.
There is also news from India, where reports suggest the government is discussing a reduction in gold and silver import duties. The current duty is 15%, after being raised from 6% in May, and industry representatives have pushed for a return to 6%. A duty cut could lower domestic prices and unlock pent-up demand in one of the world’s largest bullion-importing markets.
Elsewhere in metals, silver rose 1.3% to $70.11 per ounce, platinum climbed 1.8% to $1,882.60 per ounce, and copper futures on the London Metal Exchange edged up 0.4% to $14,338.15 a ton.
