Gold tumbles as Warsh sparks rally on the US Dollar
Gold (XAU/USD) prices extend losses to over 2.50% on Friday as market participants digest hawkish comments from Federal Reserve (Fed) Chair Kevin Warsh at Jackson Hole. Rising US Treasury yields and overall US Dollar strength are the two drivers of the sudden weakness in precious metals. The XAU/USD pair trades at $4,473, after hitting a high of $4,629. XAU/USD extends losses as Jackson Hole remarks revive Fed tightening risks Warsh commented that he still sees inflation as a priority, leaning hawkish as he recognized that underlying inflation measures havent improved. He stated that the Fed must be confident inflation is returning to its 2% goal, or otherwise “we have work to do.” In his prepared remarks, he acknowledged that consumer spending is healthy and that the labor market is solid. Nevertheless, when speaking about price stability, Warsh acknowledged that the figures were “more concerning,” suggesting that the Fed would focus on tackling inflation. Immediately after his remarks, money markets priced in a 50% chance of a 25-basis-point rate hike by the Fed at the September 16 meeting. As of writing, investors trimmed the odds to nearly 44%, but for December, they see an 82% chance, according to Prime Terminal. The Greenback is rising by over
