Gold Prices Plummet 7% Amid Repricing of Interest Rates
Spot gold reached its lowest level in two weeks at $4,375 on Tuesday, marking a 7% decline from last week's peak of $4,700. This significant drop is attributed to a single repricing event following a speech by Federal Reserve Chairman Jerome Powell at the Jackson Hole conference.
The metal's value has been closely tied to interest rates, and with hike odds now rising to 66.4%, gold prices have adjusted accordingly. Fed funds futures imply a 67% chance of a rate hike on September 16 and 60 basis points of tightening over the next twelve months.
Despite this decline, gold still managed to post its strongest month since January, gaining 9.6%. However, it's essential to note that this rally was primarily driven by positioning for a policy outcome that did not materialize.