Warsh Hints at Rate Hikes, Sending Gold Prices Down 1.17% in India

Gold prices in India fell by 1.17% to ₹154,460 due to a hawkish shift in U.S. Federal Reserve expectations after Chair Kevin Warsh indicated that interest-rate hikes may be necessary if inflation fails to move convincingly toward the 2% target.

The probability of a September Fed rate hike increased sharply from 36% to 57%, strengthening the dollar and weighing on gold prices. Markets are now looking for further clues on the Fed's policy path through upcoming U.S. labour-market data, including job openings, ADP employment, weekly jobless claims, and nonfarm payrolls.

Despite recent price weakness, speculative positioning remained firm, with a net long position of 151,315 contracts, up by 5,383 from the previous week. However, physical demand showed signs of weakness in India, where gold discounts widened sharply to $135 per ounce from $65 previously.