Gold enters the new trading week after a strong rally, with market attention shifting to PCE inflation, U.S. growth data, and Fed Chair Kevin Warsh’s speech at Jackson Hole.

Over the past week, gold was supported by a weaker U.S. dollar, fading expectations of a September Fed rate hike, and growing concerns over the U.S. fiscal outlook. Gold broke above $4,500 per ounce following the Treasury’s bond buyback announcement and traded above $4,600 per ounce by the end of the week. Silver also held above $69 per ounce and briefly touched the $70 level.

PCE Will Be the Key Inflation Data

The main focus of the week will be the Core PCE Price Index, the Federal Reserve’s preferred measure of underlying inflation.

If inflation continues to ease, markets may strengthen expectations that the Fed will keep rates unchanged in September, which could provide further support for gold.

On the other hand, a stronger-than-expected PCE reading could revive expectations of a more hawkish Fed stance and put pressure on precious metals.

The same day will also bring the second estimate of second-quarter GDP and Durable Goods Orders, offering further clues about the health of the U.S. economy.

Jackson Hole Could Shape Fed Expectations

The most closely watched event later in the week will be Fed Chair Kevin Warsh’s speech at the Jackson Hole symposium.

Investors will focus on how Warsh assesses three key issues:

• Inflation remaining above target

• Signs of slowing in the labor market

• Risks to U.S. economic growth

A more dovish message could weigh on the dollar and Treasury yields, supporting gold. In contrast, a more hawkish tone could revive rate-hike expectations.

Labor Market Data Also Matter

Weekly jobless claims will continue to provide a timely signal on labor market conditions.

More importantly, Friday’s preliminary annual benchmark revision to Nonfarm Payrolls could show whether previously reported U.S. employment figures were overstated or understated.

A significant downward revision could reinforce expectations that the Fed will remain on hold in September.

Key Economic Events to Watch

Tuesday: Consumer Confidence, New Home Sales

Wednesday: Core PCE Price Index, Q2 GDP Second Estimate, Durable Goods Orders

Thursday: Weekly Jobless Claims

Friday: Fed Chair Warsh’s Jackson Hole speech, preliminary annual Nonfarm Payrolls revision, University of Michigan Final Consumer Sentiment

Conclusion

Gold is heading into a data-heavy week after reclaiming the $4,600 per ounce area.

A bullish scenario for gold would be reinforced by softer inflation, weaker economic data, and a more cautious Fed message.

By contrast, hotter PCE inflation, stronger growth data, or a hawkish message from Jackson Hole could lift the dollar and Treasury yields, creating near-term pressure on gold and silver.

The key issue next week will therefore be how markets adjust expectations for Federal Reserve policy ahead of the September meeting.

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

Source: Kitco