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Gold falls more than 2.5% after hawkish Warsh remarks lift the dollar

XAU/USD was trading around $4,473 after a high near $4,629, as the US 10-year Treasury yield jumped to about 4.728% and Fed rate hike odds rose.

Reported · Written up by our desk · Precious Metals

Gold prices extended losses on Friday, falling more than 2.5% as traders digested hawkish comments from Federal Reserve Chair Kevin Warsh at Jackson Hole, which supported a stronger US dollar and higher Treasury yields, FXStreet reports. Warsh said inflation remains a priority and suggested the Fed would need to make progress toward its 2% goal, while also acknowledging that consumer spending is healthy and the labor market is solid. He added that price stability figures were “more concerning,” reinforcing expectations the central bank would stay focused on inflation. Following the remarks, money markets moved to price a 50% chance of a 25-basis-point rate hike at the September 16 meeting, before trimming the probability to nearly 44% in the immediate aftermath. For December, markets were pricing an 82% chance, according to Prime Terminal, while the US Dollar Index rose more than 0.60% to 99.72. The US 10-year Treasury yield jumped 5.5 basis points to about 4.728%, and gold also tested levels near its 200-day simple moving average before reversing upward above the $4,550 area. FXStreet also cited mixed economic inputs including a downward revision to the nonfarm payrolls annual revision and a University of Michigan consumer sentiment print that was higher than estimates but softer than July.

Latest closeGold $4,666.20 ▲0.6%|Dollar index 99.11 ▲0.2%

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