Gold Prices Plummet on Hawkish Fed Tone, COMEX Gold Futures Drop 1.23%

Gold prices plummeted on August 31 after Federal Reserve Chair Kevin Warsh's hawkish tone on inflation led to profit booking. COMEX gold futures dropped 1.23% to $4,474.30 per ounce at 02:37 GMT, while silver declined 1.71% to $65.85 per ounce in early trading.

On the domestic front, MCX gold futures for the October contract opened Monday's session 1.09% lower at Rs 1,54,239 per 10 grams. MCX silver futures for the September contract dropped 1% to Rs 2,33,500 per kilogram at 09:21 IST.

Analysts say that gold prices fell nearly 3% on Friday, marking their sharpest decline in weeks, due to a stronger US dollar and rising Treasury yields. Governor Warsh reiterated that underlying inflation has not 'meaningfully improved' and stressed that restoring price stability remains the Fed's primary objective.

The CME FedWatch probability of a 25 bps hike in September jumped to around 57% from nearly 35% a day earlier. Despite the sharp correction, gold's broader support from the 'debasement trade' remains intact, with investors continuing to monitor concerns over US fiscal deficits and rising government debt.