Key Takeaways:
COMEX gold fell 3.19 percent to $4,454.52 per ounce Friday, testing $4,450 support as Federal Reserve rate-hike bets jumped after Chair Kevin Warsh's Jackson Hole speech.
The probability of a September rate hike rose to 55.7 percent from 35.4 percent in CME FedWatch pricing, according to Reuters, after Warsh said the central bank "will have work to do" if policymakers lack confidence that inflation is returning to the 2 percent target.
Spot gold dropped 3.19 percent to $4,454.52 per ounce on Friday, while COMEX gold traded at $4,529.90. The 10-year Treasury yield climbed to 4.73 percent and the 2-year yield rose 12.79 basis points to 4.36 percent, strengthening the dollar and raising the opportunity cost of holding non-yielding gold. July PCE inflation held at 3.7 percent headline and 3.3 percent core, well above the Fed's target.
A break below $4,450 would expose $4,380, while resistance sits at $4,550 and $4,620. Escalation in Iran tensions could push prices higher through safe-haven demand, while further Fed tightening would strengthen the dollar and pressure gold further.
Warsh's remarks at the Jackson Hole Symposium shifted market expectations sharply. The CME FedWatch tool showed September hike probability climbing from 35.4 percent to 55.7 percent following the speech, according to Reuters. Warsh noted that PCE inflation remains "far above" the Fed's 2 percent target and that current financial conditions do not appear particularly restrictive.
Rising Treasury yields compounded the pressure on gold. The 2-year yield gained 12.79 basis points to 4.36 percent on Friday, while the 10-year yield reached 4.73 percent and the 30-year yield climbed to approximately 5.213 percent. A stronger dollar, trading near 99.70 on the DXY, further weighed on the precious metal.
Geopolitical risk from the Middle East continues to provide a floor under gold prices. Crude oil traded at $83.40 per barrel for WTI and $89.31 for Brent, with developments around the Strait of Hormuz capable of generating significant market moves. Any escalation in the Iran conflict could trigger renewed safe-haven buying in gold.
Silver followed gold lower, falling 4.3 percent to $66.28 per ounce on Friday, a steeper decline than gold's 3.19 percent drop. COMEX silver traded near $66.995, with immediate support at $64 and $62, while resistance sits at $69 and $71. As both a precious and industrial metal, silver's direction depends on the dollar, Treasury yields, and economic-growth expectations.
Gold and silver both snapped three-week winning streaks on profit-taking, according to market data. The next major event for gold is the September Fed meeting, where rate-hike expectations will be shaped by upcoming payrolls and inflation data.
This article is for informational purposes only and does not constitute investment advice.
