Gold Tumbles as Hawkish Fed Signals Revive September Rate Hike Bets

Gold prices plummeted 3% on Friday due to a stronger dollar and renewed expectations of a September US interest-rate hike. The decline interrupted a powerful monthly rally driven by concerns over America's mounting debt burden and currency debasement.

Spot gold fell 3.2% to $4,456.20 an ounce, while US gold futures declined 3.4% to $4,506.66. Spot bullion was down 3.2% for the week, while futures were set for a 3.8% weekly decline.

The sell-off came after Federal Reserve Chair Kevin Warsh used his first address at the Jackson Hole Economic Policy Symposium to reinforce the central bank's focus on price stability. Traders interpreted his remarks as a signal that policymakers could resume tightening monetary policy as early as September.

Markets rapidly repriced the outlook for US interest rates, with the probability of a quarter-point rate increase at the Federal Open Market Committee's September meeting rising above 57% from about 35% a day earlier.