Gold Tumbles Below $4,450 as Warsh's Hawkish Comments Revive Rate Hike Bets

Gold prices fell below $4,450 on Tuesday as Federal Reserve Governor Kevin Warsh's hawkish comments revived speculation about further interest rate hikes. This shift in monetary policy expectations bolstered the US dollar and put downward pressure on gold.

Warsh signaled that persistent inflation could force the Fed to tighten its stance, a move that would increase the opportunity cost of holding non-yielding assets like gold. His remarks caught many investors off guard, with Michael Hartnett, chief investment strategist at Bank of America, noting that 'Warsh's language suggests that the Fed is not done with its fight against inflation.'

The US dollar index rose 0.4% against a basket of major currencies, making gold more expensive for overseas buyers. Meanwhile, the yield on the benchmark 10-year Treasury note climbed to 4.32%, reflecting growing expectations of another rate increase.