Gold wavers as investors await U.S. inflation, Warsh speech

Gold prices inched down from a more than three-month high on Tuesday, as investors eager for the interest rate outlook awaited upcoming U.S. inflation data and a speech from Federal Reserve Chair Kevin Warsh this week.
At 09:12 ET (13:12 GMT), spot gold had dropped 0.4% to $4,632.87 an ounce, while gold futures had fallen 0.2% to $4,686.86 an ounce.

The yellow metal advanced last week, powered by the U.S. Treasury’s plans to at least double buybacks of longer-dated government debt. The announcement revived concerns over fiscal policy, dollar purchasing power and the appeal of alternative stores of value.

Bond yields declined, lowering the opportunity cost of holding non-yielding gold. Meanwhile the dollar weakened, making bullion cheaper for overseas buyers. 

Treasury Secretary Scott Bessent has said he is prepared to expand buybacks of longer-dated debt, although he offered no fresh indication of additional action on Monday. He has also said the administration will soon unveil a fiscal initiative aimed at addressing the high cost of government borrowing.

The policy shift has help revive the so-called debasement trade, which partially drove a sharp rally in gold last year. Investors are increasingly looking at gold as a hedge against the possibility that aggressive fiscal policies and easier financial conditions could soften the purchasing power of the dollar over time.

Markets are now looking ahead to the release on Wednesday of the Bureau of Economic Analysis’ core personal consumption expenditures price index, one of the Fed’s preferred inflation metrics. Warsh will then speak on Friday at the Fed’s annual Jackson Hole event.

Elsewhere, the White House has threatened economic punishment against countries that continue doing business with Iran, as part of a campaign to isolate Tehran. At the same time, the U.S.-Canada trade dispute intensified after talks broke down, with Washington imposing 50% tariffs on some Canadian goods and threatening the same rate on Canadian cars, trucks and auto parts from January 2027.

Those developments could test gold’s role as a portfolio diversifier, as investors grapple with a mix of fiscal worries, trade tensions, geopolitical risk and uncertainty over monetary policy.

Tony Sycamore, senior market analyst at IG, said the recent advance leaves little doubt that gold has likely formed a base at the late-June low near $3,942. Sycamore said the metal’s rally earlier in August initially reflected optimism over a possible diplomatic breakthrough in the Middle East, which would have lowered oil prices and reduced pressure on central banks to raise interest rates.