Gold Slumps to Near-Two-Week Low as Fed Hawkishness and War Escalate

Gold prices hit their lowest point in nearly two weeks on Monday after US Federal Reserve Chair Kevin Warsh hinted that interest rate hikes may be necessary to combat inflation. Spot gold fell by 0.8% to $4,417.04 per ounce by 0406 GMT, its weakest level since August 19.

The decline was triggered by a combination of factors, including the hawkish tone struck by Warsh at Jackson Hole and escalating Middle East tensions that fueled inflation fears. Oil prices rose more than two percent after US President Donald Trump announced American strikes on Iran's energy hub of Kharg Island.

Markets currently see a 60% chance of a Fed rate hike in September, according to the CME FedWatch tool. This has put downward pressure on gold, as it typically loses appeal in a rising interest rate environment. Spot silver fell by 0.4%, platinum declined by 1.3%, and palladium slipped by 2.5%.