Gold Craters on Warsh's Hawkish Stance, Rate Hike Bets Soar
Gold prices plummeted to near two-week lows on Monday after US Federal Reserve Chair Kevin Warsh signaled that interest rate hikes may be necessary to combat inflation. Spot gold fell 0.8% to $4,417.04 per ounce by 0406 GMT, its weakest level since August 19.
According to Tim Waterer, chief market analyst at KCM Trade, gold is 'still licking its wounds' after Warsh's hawkish tone at the Jackson Hole symposium. Waterer noted that US military action in Iran has put upward pressure on oil prices, adding to gold's woes from an inflation standpoint.
The Federal Reserve may need to take action if policymakers don't see confidence that inflation is heading down to 2%, Warsh said. Markets currently give a 60% chance of a Fed rate hike in September, according to the CME FedWatch tool.