Gold posted its steepest one-day decline in weeks on Friday, falling 2.88% to settle at $4,529.90 an ounce after Federal Reserve Chair Kevin Warsh's hawkish remarks at the Jackson Hole symposium sent traders rushing to reprice the odds of a September interest-rate increase, according to a Yahoo Finance market recap.
The reversal came after weeks of steady gains. Earlier in the session, before Warsh spoke, spot gold had been little changed near $4,600 an ounce and was on track for its largest monthly gain since 1999, according to TradingView's Commodity Corner. That rally had been underpinned by heavy central-bank buying — the World Gold Council's most recent reserve-manager survey found 89% of respondents expect global gold holdings to keep rising over the next year, with a record 45% planning to add to their own reserves — and by bets that the Fed was closer to cutting rates than raising them.
A Hawkish Reset
Warsh upended that calculus. His warning that inflation "is running above our 2% target" pushed the CME FedWatch-tracked odds of a September rate hike to roughly 56%, up from about 35% the day before, according to CNBC's reporting on the speech. Higher rates raise the opportunity cost of holding non-yielding bullion, which typically weighs on gold prices even amid elevated geopolitical and trade uncertainty. Silver and platinum, which had also been trading firm earlier in the week, pulled back alongside gold as the broader precious-metals complex adjusted to the shift in rate expectations.
Oil moved on a separate set of drivers. Brent crude was already down about 0.3% to $89.45 a barrel and West Texas Intermediate had slipped a similar amount to $83.31 ahead of the Warsh speech, extending a weekly decline of roughly 5% and 4%, respectively, as easing concern over US policy toward Iran offset a stronger dollar, according to Fortune's daily oil-price tracker.
Traders now face a question that will shape commodity positioning into the fall: whether Friday's move was a one-day repricing or the start of a longer pullback in gold's year-long advance. The next major catalysts arrive before the Fed's September 15-16 meeting, when August's jobs report and inflation data will either validate Warsh's hawkish read or give the rally room to resume.
