With no fresh headlines driving the move, gold’s continued softness looks like simple follow-through from Friday’s sharp reaction to Warsh’s hawkish Jackson Hole remarks, which knocked spot prices down more than 3 percent to around $4,450 an ounce and erased the metal’s gains for the week. The absence of new catalysts means the metal is likely trading on residual positioning, with traders who were caught offside by Friday’s move continuing to trim exposure, or dip-buyers holding off until there’s more clarity on whether the coming August jobs and inflation data will validate Warsh’s hawkish framing. With the September rate decision now more finely balanced than it appeared a week ago, gold is likely to stay rangebound and headline-driven into that data, rather than establishing a clear new trend on a session with nothing fresh behind it.
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Gold is simply carrying over Friday’s hawkish-Warsh selloff into a quiet session with nothing new behind the move.
Summary:
- Gold is trading lower on the session, with no new news driving the move.
- The decline is a continuation of Friday’s sharp selloff, when spot gold fell roughly 3% to around $4,456 an ounce after Fed Chair Kevin Warsh’s hawkish Jackson Hole remarks.
- Friday’s drop erased gold’s gains for the week and interrupted a strong August rally that had put bullion on track for its best monthly performance this century.
- The move was driven by rising Treasury yields and a firmer dollar as traders lifted their expectations for a September rate hike.
- With no fresh catalyst today, the continued weakness appears to reflect residual position adjustment rather than any new development.
- If you want a fresh catalyst maybe this(Oil prices have jumped higher after US attacked Iran and Iran retailiated ), but I think Warsh is the bigger factor.
Gold is trading lower again on Monday, extending Friday’s sharp selloff with no fresh news driving the move. The decline appears to be simple follow-through from Friday’s session, when spot gold tumbled roughly 3 percent to around $4,450 an ounce after Federal Reserve Chair Kevin Warsh delivered a hawkish first Jackson Hole speech as chairman, reinforcing the central bank’s focus on bringing inflation back to target.
Friday’s drop erased gold’s gains for the week and interrupted what had been a strong August rally, with bullion on track for its best monthly performance this century heading into the speech, having risen more than 13 percent for the month. Warsh’s remarks, in which he said the Fed needed confidence that underlying inflation is moving toward its objective clearly and at sufficient speed, prompted traders to lift their expectations for a September rate hike, lifting Treasury yields and the dollar and increasing the opportunity cost of holding non-yielding gold.
With no new catalyst emerging over the weekend or into today’s session, the continued softness in gold looks to reflect ongoing position adjustment rather than any fresh development. Traders appear to still be digesting Friday’s repricing, with some continuing to trim length built up during August’s rally while others stay on the sidelines pending further clarity on the rate path.
Attention now turns to the upcoming August jobs and inflation data, which will be the key test of whether Warsh’s hawkish framing is validated or whether softer prints reopen the door to a Fed hold in September. Until then, gold looks likely to remain sensitive to shifts in rate expectations and dollar strength, with today’s session offering little in the way of a fresh directional signal beyond the continuation of Friday’s move.
This article was written by Eamonn Sheridan at investinglive.com.