Gold Prices Tumble as Hawkish Warsh Comments Boost Rate Hike Bets
Gold prices declined on Monday, dipping below $4,450 as Federal Reserve Chairman Kevin Warsh's hawkish comments at the Jackson Hole economic symposium lifted bets on a September rate hike.
The Fed Chairman warned that inflation is not slowing significantly and that policymakers have 'work to do' unless they become confident it has meaningfully shifted. This sparked a 56.9% probability of a US rate hike in September, up from 39.9% before Warsh's comments, according to the CME FedWatch tool.
Tai Wong, an independent analyst, noted that 'Gold is getting slapped hard' as Warsh's remarks made the market price the September meeting as a coin flip.
Ongoing tensions in the Middle East could further weigh on gold prices due to oil-driven inflation concerns. The US military struck Iranian rocket launchers over the weekend, following weeks of relative calm.