Gold Craters Below $4,500 as Fed Chair Warsh Signals Rate Hike Expectations

On August 28 ET, spot gold (XAUUSD) plummeted nearly 3% to below $4,500 after Federal Reserve Chair Warsh signaled a hawkish stance at the Jackson Hole annual symposium.

Warsh reiterated that the 2% inflation target remains 'unwavering and non-negotiable' and emphasized that current financial conditions are not restrictive. This led markets to raise their expectations of Federal Reserve rate hikes, with traders resuming bets on higher interest rates in the future.

The resulting increase in U.S. Treasury yields further pressured gold prices, as investors favored interest-bearing assets over non-interest-paying gold. As a result, gold came under significant pressure and fell below its previous low since August 20.