Gold prices reversed early gains to fall on Monday, slipping about 0.4% to $4,436.57 an ounce as investors reassessed the Federal Reserve’s monetary policy outlook following Chair Kevin Warsh’s hawkish inflation message. At 01:49 ET (05:49 GMT), spot gold fell 0.4% to $4,436.57 an ounce, while silver declined 1% to $4,486.19. Platinum rose 0.2% to $66.53 an ounce, while palladium fell 0.8% to $1,809.07. The dollar index fell 0.1% to 99.62.
Warsh’s Jackson Hole Speech Revives Rate Hike Bets
Gold fell 3.2% on Friday, its biggest daily decline since early June, after Federal Reserve Chair Kevin Warsh signaled that the U.S. central bank still has work to do to bring inflation back down to its 2% target. His comments pushed investors to raise expectations for another rate increase, weighing heavily on non-yielding bullion.
Markets are now pricing roughly a 57% probability of a September rate hike, according to CME’s Fedwatch tool, with odds jumping from roughly 1-in-3 to more than 2-in-5. That shift altered the opportunity cost for traders, as interest-bearing government bonds became relatively more attractive while the U.S. dollar strengthened in response to Warsh’s remarks, making the metal more expensive for buyers using other currencies.
ANZ analysts noted that the retreat reflected precisely that shift, as gold fell sharply after Warsh’s inflation warning increased expectations of rate hikes later this year and reduced investor demand, though they expect the downside to remain limited as the debasement trade continues to attract buyers. Meanwhile, gold prices declined nearly 1.86 per cent as markets digested higher-than-expected inflation data and a hawkish debut speech by US Federal Reserve Chair Kevin Warsh, with gold futures standing at Rs 1,56,400 and silver futures at Rs 2,36,651 per kg on the MCX. The price of 10 grams of 24-carat gold was at Rs 1,59,578 on Friday, down from Rs 1,62,603 seen on Monday at market opening, according to data published by the India Bullion and Jewellers Association (IBJA).
Energy Markets and Middle East Supply Pressures
Geopolitical developments and energy markets added further pressure, with Brent crude futures down over 5%. Oil rose to around $89.38 a barrel on Monday and reached $84.50 after U.S. forces struck Iranian launchers on Larak Island on Sunday, and Iran then attacked U.S. forces stationed in Jordan, adding to concerns that the conflict could intensify. On Tuesday, Canada announced retaliatory tariffs on $20 billion in US goods, beginning on September 8th, 2026, in reaction to the Trump administration’s 50 per cent tariffs imposed on Canada over the weekend.
The Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury issued a determination expanding economic sanctions under Executive Order 13902, effective August 24, 2026, applying section 1(a)(i) of the Executive Order to the aviation, digital asset, gold, shipping, and technology sectors of the Iranian economy. Meanwhile, Iran and Oman reached a revenue-sharing agreement on the Strait of Hormuz as the two sides neared a deal on its management, and oil later eased from recent highs on fresh signs of diplomatic progress around the Strait of Hormuz. Lower oil is probably one of the drivers supporting gold prices, said Bart Melek, global head of commodity strategy at TD Securities, adding that the decline in many ways has contributed to the interest-rate outlook with short-term rates falling a little bit. Elevated energy prices reinforce expectations that the Fed will keep interest rates higher for longer to combat inflation, weighing on non-yielding bullion.
Treasury Intervention Keeps Debasement Trade Alive
Beneath the immediate policy reactions, the underlying debasement trade continues to attract buyers. On August 25, buoyed by a slightly reduced possibility of a Fed rate hike and notion that the Federal Reserve may take extraordinary measures to keep the long-term yields in check, spot gold surged to $4,697, the highest since May 14. Platinum and palladium gained over the period, while U.S. gold futures previously settled higher.
Renewed concerns about currency debasement and US Treasury support for long-dated bonds had caused the bullion rally to multi-month highs earlier in the week before stronger-than-expected economic data led to market pricing in a higher probability of the Fed remaining restrictive for longer. At the time of writing, the shiny metal traded with a daily gain of 0.30 per cent at $4,610 as the US Dollar retreated slightly.
Mixed Economic Data and Central Bank Independence
The broader macroeconomic data published during the week pointed to a stronger-than-expected economy. July’s US personal consumption expenditures (PCE) inflation reading came in at 3.7 per cent year-on-year, alongside US labour and trade data pointing to a robust economy. Earlier on Monday, Fed’s New York President John Williams said he remained optimistic that inflation pressures were on track to ease gradually, but if they do not, the U.S. central bank will not hesitate to respond with rate hikes.
Upcoming Employment Data and Key Price Supports
Traders are now turning their attention to upcoming U.S. data, with the U.S. ADP employment report due on Wednesday and next week’s US nonfarm payroll data on the horizon. A hawkish signal from Warsh could trigger further correction in gold towards the $4,500-$4,520 support zone, although downside may remain limited ahead of the employment reports.
