Gold Falls Amid Rate Hike Expectations and Middle East Tensions
Gold prices dipped on Monday as renewed Middle East tensions and hawkish comments from Federal Reserve Chair boosted expectations for a September rate hike. Spot gold fell 0.1% to $4,448.19 per ounce by 1030 GMT, having touched its lowest level since August 19 earlier.
The decline comes after Fed Chair Kevin Warsh said at the Jackson Hole symposium that the U.S. central bank would 'have work to do' if policymakers were not confident inflation was returning to its 2% target. This has increased expectations of a rate hike before the end of the year, with traders raising bets on a September rate hike to 62%, from about 36% before Warsh's comments.
Despite the recent pullback, gold is still up more than 10% this month, its biggest monthly gain since January. Bullion hit a more than three-month high of $4,696.18 last week after the U.S. Treasury announced plans to double liquidity-support buybacks of longer-dated bonds.