Warsh's Hawkish Tilt Sends Gold Prices Plummeting Below $4,600

Gold prices dropped below $4,600 on Friday as US Treasury yields and the US Dollar rose after Federal Reserve Chairman Kevin Warsh confirmed that the Fed prioritizes tackling inflation.

Warsh stated at the Jackson Hole conference that the central bank must be confident that inflation is returning to its 2% goal, or otherwise 'we have work to do.' He acknowledged healthy consumer spending and a solid labor market, but expressed concerns about price stability.

The comments led money markets to price in a higher chance of a rate hike in December, with investors seeing an 82% probability. This increased the US Dollar Index (DXY) by over 0.38%, while the US 10-year Treasury yield rose 1.5 basis points to 4.686%.

Gold's price action showed that it 'almost' tested its 200-day Simple Moving Average at $4,527 before reversing and pushing back above the psychological $4,550 area. If XAU/USD drops below this level, it could open the door to a move toward $4,500.