Gold Extends Losses on Fed Rate Hike Expectations

Gold fell again on Monday, adding to a sharp decline from the previous session as markets adjusted to a more hawkish message from the Federal Reserve and a fresh rise in geopolitical risk. Spot prices were down 0.4% to $4,439 an ounce, after sliding about 3% on Friday. U.S. gold futures also weakened, dropping 0.9% to $4,489.61.

Warsh’s Jackson Hole message shifts rate expectations

The latest move followed comments from Fed Chair Kevin Warsh at Jackson Hole that reinforced concern about inflation and pushed traders to price in the possibility of higher borrowing costs. Market participants are now leaning toward an interest-rate increase in September and another in December. That shift matters for gold because the metal does not generate income, making it less attractive when rates are expected to rise.

The next major guideposts for that view are due soon. The U.S. payrolls report for August is scheduled for Friday, and consumer-price data will follow on September 11. In Europe, inflation figures due this week may also strengthen expectations for another European Central Bank rate increase when policymakers meet on September 10.

Oil gains and geopolitics keep inflation worries alive

A firmer dollar added pressure on bullion, with the currency holding close to a two-week high even as U.S. Treasury yields eased. Treasury Secretary Scott Bessent also dismissed concerns about rising U.S. debt and instability in the government bond market, helping steady sentiment around Treasuries. Together, those moves left gold facing a less supportive financial backdrop.

Tensions in the Middle East added another inflationary layer to the market. Iran launched attacks on American forces in Jordan after U.S. forces struck two Iranian launchers on Larak Island, and the escalation helped push Brent crude toward $92 a barrel. Higher oil prices can feed broader inflation expectations, which in turn keep rate-hike speculation alive and weigh on gold.

The developments left traders balancing two competing forces: demand for safe-haven assets and the drag from higher expected interest rates. For now, the interest-rate channel appears to be dominating. That has kept bullion under pressure even as regional conflict remains elevated.

This article is not investment advice and recommends no asset, level or direction; a single session's move is not evidence of a trend. For background see Currency, Cross Rate, Currency Pair, and for terms the finance glossary.