Gold Prices Plummet After Hawkish Fed Speech
Gold's price surged by 20% over eight weeks in June and July, reaching a high of $4,755.00 on August 25. However, following Federal Reserve Chair Kevin Warsh's hawkish speech at Jackson Hole on August 28, gold prices dropped to around $4,524.40 an ounce by September 3.
The rise was fueled by inflationary pressures and global market volatility. Bond yields had been increasing due to rising inflation expectations, causing investors to seek safe-haven assets like gold. Additionally, rekindled hostilities between the US and Iran added to the market's uncertainty.
From a technical analysis perspective, gold futures have formed two bullish patterns: a long falling-wedge pattern of reversal and a shorter double-bottom pattern. However, these indicators are now bearish, indicating that gold may continue to decline as interest rates rise.