Gold drifts lower below $4,450 as hawkish Warsh remarks lift Fed hike bets
Gold price (XAU/USD) attracts some sellers to near $4,445 during the early Asian trading hours on Monday. The precious metal edges lower on a surprisingly hawkish speech by Federal Reserve (Fed) Chairman Kevin Warsh at the Jackson Hole economic symposium.
Gold prices dipped below $4,450 on Monday as Federal Reserve Chairman Kevin Warsh delivered a more hawkish speech during the Jackson Hole economic symposium. Warsh warned that inflation was not slowing significantly enough and suggested the central bank needed to take action, raising the odds of a September rate hike. This hawkish tone led traders to increase bets on a September rate hike, shifting the likelihood to 56.9% from 39.9% prior to Warsh's remarks, and an 88.7% chance of a December hike.
Gold is often used as a hedge against inflation, but it does not yield interest, making it less appealing when interest rates are high. Analysts noted that Warsh's comments would make the September meeting a "coin flip" and could weigh on the yellow metal due to ongoing Middle East tensions. Despite the recent optimism in precious metals, a more hawkish Fed may cause a reversal, though the prospects for such a reversal remain uncertain.
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