The key precious metal continues to hold positions above the $4,600 per ounce mark, showing a 0.7% gain over the day and partially recovering lost ground. Investors have shifted their attention to the upcoming speech by the Federal Reserve (Fed) Chair at the annual symposium in Jackson Hole, trying to gauge the future trajectory of monetary policy.
On Wednesday, gold interrupted an impressive five-day winning streak. Fresh macroeconomic data indicated that inflationary pressure in the U.S. remains above the Fed's target level. This automatically increased the likelihood of the regulator maintaining a hawkish stance, which in turn strengthened the dollar and pushed Treasury yields higher — a classic "bearish" factor for gold.
The devaluation factor: why the rally isn't fading
Despite the current correction, the fundamental uptrend remains intact. Since the start of the month, the metal has gained approximately 14%. Notably, last week the U.S. Treasury unexpectedly intervened in the government bond market, which only added fuel to the fire.
The market is once again actively pricing in the so-called "devaluation scenario." This refers to the purchase of hard assets, including gold, to protect capital from a growing budget deficit and risks of dollar weakness. It was this scenario that catalyzed the record rally in 2025. The metal is now trading at an accelerated pace, showing its best performance since 1999, and has firmly established itself above the 200-day moving average. Many traders view this as a technical signal for a trend reversal to the upside.
Institutional interest is also confirmed by the numbers: holdings in gold-focused exchange-traded funds (ETFs) rose by more than 28 tons over the week. This is the largest weekly inflow since January, which has finally reversed a two-month period of capital outflows.
Warsh's debut: a hawkish or dovish signal?
The Jackson Hole symposium is a venue where the most important shifts in central bank policy are traditionally announced. In 2022, it was here that the Fed announced its transition to aggressive tightening. Now all eyes are on Chair Kevin Warsh, who will deliver his first major speech in this role on Friday. He will need to respond to criticism of what many consider his overly insular view of the economy.
If Warsh takes a hawkish stance, intensifying rhetoric about fighting inflation, real yields and the dollar will rise, putting pressure on gold. In the opposite case, a "dovish" signal would become a powerful catalyst for a new leg of growth, capable of pushing the metal to fresh local highs.
My view: Given the accumulated "devaluation" demand and the strong inflow of funds into ETFs, any softening of Fed rhetoric could trigger a sharp upward spike in volatility. However, even under a hawkish scenario, the depth of the correction is likely to be limited, as structural factors — the budget deficit and global central bank purchases — have not disappeared. For gold, what matters now is not so much the signal itself, but how the market interprets it.