Gold Prices Plummet After Warsh's Hawkish Speech
Gold prices plummeted in Egypt's market on Saturday as local traders absorbed the impact of the global ounce's sharp drop. According to Marsad Al Dahab, 21-karat gold fell by EGP 10 from Friday's closing level to EGP 6,340 per gram.
The global ounce lost $148 over the week, opening at $4,603 and closing at $4,455, representing a weekly decline of 3.2%. The decisive factor in the shift was Federal Reserve Chair Kevin Warsh's hawkish speech on Friday.
Warsh reaffirmed that the Federal Reserve's 2% inflation target was firm and that delivering price stability remained the central bank's responsibility. He said policymakers would have 'work to do' if they were not confident that inflation was returning to target with sufficient speed, marking his clearest signal since taking office that further interest-rate hikes could be required.
The probability of a US interest-rate increase in September jumped to around 58%, from 36% beforehand, while the probability of an increase by December rose to 89%. The repricing of the interest-rate outlook triggered widespread liquidation of long positions in gold.