Warsh's Hawkish Comments Spark Fresh Selloff in Spot Gold

Spot gold prices plummeted to nearly two-week lows on Monday after Federal Reserve Chair Kevin Warsh hinted at further rate hikes to combat inflation. The precious metal fell 0.8% to $4,417.04 an ounce by 0406 GMT, its lowest since August 19. US gold futures declined 1.4% to $4,466.80.

Tim Waterer, chief market analyst at KCM Trade, attributed the decline in gold prices to the Fed's hawkish stance and escalating tensions in the Middle East, which added pressure on oil prices. The resulting inflation concerns have reinforced expectations that the Fed may need to keep policy tighter for longer.

The World Gold Council has pointed out several factors that could support a recovery in gold prices in the second half of the year, including lower rates and sustained investor demand. However, rising bond yields and a more hawkish Fed remain key downside risks.