Gold Price Slumps 9% as Hawkish Fed Comments Weigh on Precious Metals

The outlook for both gold and silver remains bearish in the near term, according to Vedika Narvekar, Research Analyst - Commodities & Currencies at Anand Rathi Shares and Stock Brokers. The key trigger that changed the Fed rate outlook was Jackson Hole, which exerted heavy selling pressure on gold and silver since Friday.

Spot Gold slipped from a three-month high of $4,697 to below $4,300, a decline of almost 9% from highs. The sell-off accelerated after Fed Chair Kevin Warsh reiterated his focus on fighting inflation. Renewed tensions in the Middle East pushed oil prices higher, adding to inflation concerns and lifting expectations of a 25-basis-point Fed hike this month to nearly 70%.

The hawkish tone was reinforced by comments from Fed Governors, who warned that persistent inflation may require further rate hikes. With global bond yields rising and the dollar strengthening, gold is facing near-term pressure as higher yields increase the opportunity cost of holding bullion.