Gold slips as Kevin Warsh prioritizes inflation over labor market

Warsh defended the current state of the labor market, describing it as consistent with full employment despite localized disruptions. His focus shifted sharply to the Fed's preferred inflation gauge, the PCE price index, which currently shows a 12-month change of 3.7% and a six-month change of 4.1%. He emphasized that the Fed must see underlying inflation moving toward its 2% objective with sufficient speed to fulfill its mandate.

While Warsh avoided explicit forward guidance on specific monetary policy adjustments, his rhetoric triggered an immediate shift in market sentiment. Investors responded by pricing in a potential interest rate hike as early as next month. Spot gold fell to $4,552.00 an ounce as the market reacted to the prospect of a prolonged tightening bias.