Gold plunges as Warsh’s Jackson Hole inflation concerns spark rate hike bets

Global equities index MSCI rose on Friday as traders placed bets for an interest rate hike following Federal Reserve Chair Kevin Warsh's speech at the Jackson Hole symposium. Warsh suggested that the central bank would need to take action if policymakers are not confident that inflation is returning to its 2% target. This comment increased the probability of a September rate hike to 55.7% from 35.4% earlier in the week.

Warsh, who had previously been cautious about providing forward guidance on interest rates, aimed to reinforce the Fed's commitment to controlling inflation. The dollar gained following Warsh's remarks, and major U.S. stock indexes such as the Dow Jones, S&P 500, and Nasdaq Composite also posted gains. Bond yields, including those for 2-year and 10-year U.S. Treasuries, rose as traders priced in the possibility of additional rate hikes.