Gold prices continued to decline in global markets on Monday, reaching their lowest level in nearly two weeks. The drop followed comments from Kevin Warsh, who indicated that the US Federal Reserve may need to raise interest rates to control inflation.
The price of spot gold fell 0.7% after Asian markets opened. It reached about $4,420 per ounce, marking its lowest level since August 19. Gold prices had already fallen by more than 3% on Friday.
Meanwhile, gold futures for December delivery declined 1.3% to $4,472 per ounce. The latest movements show that investors continue to reassess their expectations for US monetary policy.
Tim Waterer, chief market analyst at KCM Trade, said gold remains under pressure from Warsh’s recent comments at the Jackson Hole economic symposium. He noted that markets are still assessing whether Warsh’s concerns about inflation could influence the Federal Reserve’s September decision.
Warsh said on Friday that policymakers still have significant work ahead if they cannot confirm that inflation will return to the Fed’s 2% target. Investors interpreted his comments as a signal that the central bank could consider another interest-rate increase.
According to CME Group’s FedWatch tool, market expectations for a September rate hike rose sharply after Warsh’s remarks. The probability increased from 36% to 57%.
Higher interest rates usually create pressure on gold because the metal does not generate interest or other regular financial returns. Therefore, investors often prefer interest-bearing assets when central banks tighten monetary policy.
Gold also faces additional market uncertainty this week. Investors will closely watch several important US labor-market reports, including job openings and employment data. These figures could influence expectations for the Federal Reserve’s next policy decision.
Geopolitical developments also remain important for financial markets. A US official said American forces struck two Iranian missile-launch platforms on Sunday near Lark Island. The incident marked the first reported US attack on Iran since late July.
The development pushed oil prices higher and added another layer of uncertainty to global markets. Investors will continue watching both geopolitical tensions and US economic data for their potential impact on gold prices.
