Gold hits near two-week low on Fed chief's hawkish stance
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Gold prices plummeted to their lowest level in nearly two weeks on Wednesday after Federal Reserve Chair Kevin Warsh hinted that additional interest rate hikes could be required to curb inflation. Spot gold tumbled 0.8% to $4,417.04 per ounce, marking its weakest point since August 19, having slipped over three percent on Friday.
US gold futures also fell 1.4% to $4,466.80. The recent hawkish remarks from Warsh at the Jackson Hole conference have negatively impacted gold sentiment. Meanwhile, the ongoing military conflict in Iran has driven oil prices higher, exacerbating the gold market's struggles due to its perceived weakness as a hedge against inflation, commented KCM Trade chief market analyst Tim Waterer.
Despite being considered a hedge against inflation, gold generally loses its allure during rising interest rate environments, as it does not generate income. Currently, markets gauge a 60% probability of a Federal Reserve rate increase this month, according to the CME FedWatch tool.
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