Gold Price Plummets to Two-Week Low Amid Inflation Fears and Rate Hike Expectations
The price of gold fell to its lowest level in two weeks as rising tensions in the Middle East sparked renewed inflation fears and increased expectations of a Federal Reserve rate hike later this month.
Fed Chairman Kevin Warsh's hawkish comments at the Jackson Hole symposium triggered a market sell-off, with spot gold dropping 2% to $4,326 an ounce, while US gold futures fell 2.3% below $4,400 an ounce.
The conflict in the Middle East has weighed on gold since its beginning, as higher energy costs and resulting inflationary pressure increase the likelihood of higher interest rates, which typically reduces the appeal of non-yielding assets like bullion.
Despite the latest sell-off, several major banks remain bullish on gold, with Goldman Sachs predicting a price target of $4,900 an ounce by year-end.