Gold hits near two-week low on Fed chief's hawkish stance

Gold prices dropped to their lowest in nearly two weeks on Monday after US Federal Reserve Chair Kevin Warsh hinted that interest rate hikes might be necessary to curb price pressures. The slide in gold prices continued on Friday, with spot gold falling 0.8% to US$4,417.04 per ounce, the weakest level since August 19. This decline was even steeper, falling more than three percent, according to the source.

US gold futures also fell by 1.4%, reaching US$4,466.80. Analyst Tim Waterer from KCM Trade suggested that the hawkish stance of Warsh during the Jackson Hole economic symposium had exacerbated gold's struggles in the context of inflation. While gold is often seen as a hedge against inflation, it typically loses appeal in a rising interest rate environment, as it does not yield interest.

The Federal Reserve is expected to face challenges in convincing policymakers that inflation will decrease to the desired two percent, according to Warsh's comments from the symposium. Currently, markets estimate a 60 percent chance of a Federal Reserve rate hike in September, based on the CME FedWatch tool. Tensions in the Middle East, particularly after US strikes on Iran, have added to inflation concerns and negatively impacted gold prices.

Spot silver, platinum, and palladium also experienced declines, with silver falling 0.4% to US$66.10, platinum dropping 1.3% to US$1,797.03, and palladium slipping 2.5% to US$1,386.96.