Gold Slumps on Hawkish Fed Comments and Rising Interest Rate Expectations
US Federal Reserve Chair Kevin Warsh's hawkish comments at Jackson Hole have pushed gold prices to near two-week lows. US gold futures for December delivery fell 1.3% to $4,472.90, while spot gold dropped 0.7% to $44,423.84 per ounce, its lowest since August 19.
Warsh's inflation-fighting rhetoric has markets reevaluating the likelihood of a Fed rate hike in September, with the CME FedWatch tool showing a 57% chance of a hike compared to 36% before his comments. Tim Waterer, chief market analyst at KCM Trade, said gold is 'still licking its wounds' from Warsh's remarks.
The shift in interest rate expectations has made gold less appealing as a hedge against inflation, typically losing value in a rising interest rate environment. This week's US labour market reports, including job openings and nonfarm payrolls data, could provide further catalysts for gold's price movement.