Gold gains 0.8% as markets await PCE data, Warsh speech

Gold rose 0.8% to hover near record highs as investors positioned for US PCE data and Fed Chair Kevin Warsh's Jackson Hole speech.

"The Fed's credibility is at risk — the markets are starting to think that the committee doesn't really care about getting to 2%," Jim Bullard, former St. Louis Fed president and dean of Purdue University's Mitch Daniels School of Business, said.

Spot gold gained more than 20% year-to-date, supported by central bank buying and a softer dollar, according to market data. The 10-year Treasury yield stood at 4.71%, down 0.51% on the day, while rate futures priced a 38.4% chance of a 25-basis-point hike at the September FOMC meeting.

Gold last traded at record highs in early August. The core PCE price index, due this week, and Warsh's Friday keynote at the Jackson Hole Economic Symposium are the next events that could determine whether the metal extends its rally or pulls back.

Core PCE Expected to Hold at 3.3%

Economists expect the core PCE price index to rise 0.2% month-over-month in July, keeping the annual rate steady at 3.3%, according to Barchart data. Headline inflation stands at 3.4%, well above the Fed's 2% target. A cooler reading could reinforce expectations for rate cuts, while a hotter print might trigger profit-taking in bullion.

The Fed held rates at its July meeting, with three regional presidents dissenting in favor of a hike — the most significant internal disagreement in years. Markets expect a hold in September, though futures price roughly one-in-three odds of a hike. CME FedWatch data shows the probability of a December hike at 67.6%, rising to 79.5% for March 2027.

European mining stocks advanced Monday, buoyed by higher gold prices, while the metal's rally has outpaced silver and other precious metals this year. Safe-haven demand has also been supported by the ongoing US-Iran conflict and tariff-driven inflation pressures, which have kept investors rotating into bullion.

Warsh's Jackson Hole Debut

Warsh, who succeeded Jerome Powell in May 2026, delivers his keynote Friday at the symposium running Aug 27-29 under the theme "Financial Innovation: Implications for Payments and Policy." He has shown reluctance to offer forward guidance, preferring a data-dependent approach that keeps markets guessing.

The speech comes as selling pressure intensifies in the $30 trillion US government debt market. US national debt surpassed $40 trillion for the first time, while Trump has called on the Fed to cut rates, fueling concerns over political interference at the central bank. Markets anticipate at least one, possibly two quarter-point increases by mid-2027.

A dovish tone from Warsh could push gold to new all-time highs, while hawkish remarks on inflation persistence might trigger profit-taking after the recent rally. The September FOMC meeting, three weeks after Jackson Hole, remains the next policy decision point.

This article is for informational purposes only and does not constitute investment advice.