Gold Prices Plummet as Rate Hike Expectations Soar Amid US-Iran Tensions
Gold prices extended their decline from last Friday's close, dropping below $4,400 on August 31. The metal hit a low of $4,396.36 during intraday trading as expectations for a September rate hike by the Federal Reserve intensified following Fed Chair Kevin Warsh's hawkish speech at the Jackson Hole symposium.
The speech significantly boosted rate hike expectations, with probabilities rising from about 35% to around 60%. This, combined with renewed escalation of tensions between the US and Iran over the weekend, fueled inflation fears and put pressure on gold prices. Rising international oil prices also contributed to this trend, with Brent crude climbing back above $90.
A technical analysis of the daily chart shows that while gold prices have fallen near the $4,400 mark, they have rebounded above it, forming a confluent support structure at this level. If gold prices close below the 20-day moving average today and break below $4,400, they may enter a deeper correction phase in the short term.