Gold Prices Plummet as Warsh Signals Possible Rate Hikes
Gold prices continued to fall on Monday, dropping to near two-week lows as investors reacted to Federal Reserve Chair Kevin Warsh's signals that interest rate hikes may be needed to combat inflation.
The price of spot gold fell by 0.7% to $44,423.84 per ounce, marking its lowest level since August 19. US gold futures for December delivery declined by 1.3% to $4,472.90.
Warsh's comments at the Jackson Hole economic symposium in Wyoming last Friday were seen as hawkish, suggesting that rate hikes may be necessary to contain inflation pressures. This shift in expectations has led markets to price a 57% chance of a Fed rate hike in September, up from 36% before Warsh's comments.
Tim Waterer, chief market analyst at KCM Trade, noted that 'gold is still licking its wounds after the hawkish tone struck by Warsh.' He added that 'the market is still digesting the shift in rate expectations: it remains to be seen whether Warsh's inflation-fighting rhetoric will translate into an actual September hike.'