Gold Prices Plummet to Near Two-Week Lows Amid Hawkish Fed Bets

Gold prices dropped to nearly two-week lows on Tuesday as traders ramped up bets for a rate hike in September following Federal Reserve Chair Kevin Warsh's hawkish remarks at the Jackson Hole Symposium.

The surge in inflation risks, particularly due to higher energy prices stemming from US-Iran tensions, further weighed on gold. Traders are now pricing in over 65% chance of a Fed rate hike at the upcoming policy meeting on September 15-16.

Warsh's speech signaled that the central bank may consider raising interest rates if inflation does not slow down significantly. Rising energy prices have revived fears of persistent inflation, increasing bets on a potential interest rate hike.

The geopolitical risk premium remains in play due to ongoing US-Iran tensions, supporting crude oil prices and the safe-haven USD. Traders might refrain from placing aggressive directional bets until important US macro data is released later this week.