Dollar Surges as Fed Hawkishness Takes Down Gold and Crypto

The US dollar rebounded strongly after Fed Chair Kevin Warsh's hawkish speech at Jackson Hole, causing assets negatively correlated with the dollar to decline.

Gold prices fell by 3% as investors took profits following the increased expectations of a September rate hike. The probability of a 25-basis-point Fed rate hike rose to 57.5%, up from 35.4% just yesterday and 55.8% one month ago.

The yield on the 2-year US Treasury increased by more than 6 basis points to around 4.3%. Bitcoin dropped from $79,500 to roughly $77,000, while major cryptocurrencies such as Ethereum and Ripple fell 4-5%.