Warsh's Hawkish Comments Spark Gold Price Plunge

Gold prices plummeted in global markets after Federal Reserve Chairman Kevin Warsh's hawkish comments at the Jackson Hole meeting.

The statements, delivered on August 29, sparked a sharp decline in gold, with spot gold falling to $4,455 per ounce and gram gold dropping below the psychological threshold of 7,000 Turkish Lira (TL) after five days.

Warsh warned that inflation continues to run above the 2% target, stating 'Although PCE and Consumer Price Index data this summer came in better than expected, this does not show me that underlying trends have improved significantly.' He also emphasized the Fed's responsibility for high inflation, saying 'We must be sure that underlying inflation is clearly and sufficiently rapidly moving toward our target. Otherwise, we have work to do.'

The hawkish tone of Warsh's comments led to a surge in rate hike expectations, with the probability of a September interest rate hike rising to 57.5%.