Spot Gold's Three-Week Winning Streak Ends Following Jackson Hole Remarks
The probability of a rate hike in September approaching 50% created severe pressure on the precious metal, bringing its largest daily loss of the recent period.
Following hawkish remarks by US Federal Reserve Chair Kevin Warsh at the Jackson Hole Economic Symposium and the probability of a September rate hike approaching 50%, spot gold plummeted sharply, ending its three-week winning streak.
Sharp Decline After Jackson Hole
Hawkish messages delivered by US Federal Reserve Chair Kevin Warsh at the Jackson Hole Economic Symposium caused gold prices to retreat rapidly in global markets.
Spot gold dropped by $150.70 on Friday to $4,504.10, bringing an end to its three-week winning streak.
Weekly Trajectory and Record Daily Loss
This decline on the final trading day of the week was recorded as the largest daily loss seen since June 10.
Spot gold, which started Friday at the $4,656 level, climbed up to $4,688 but completed the day at $4,504.10 amid heavy selling.
Kevin Warsh's Inflation Messages
Taking over the Fed Chairmanship in May, Kevin Warsh drew attention to the fact that inflation has not yet slowed down significantly.
Warsh emphasized the need to be certain that underlying price pressures have receded and that the Fed's commitment to returning to its 2% target remains firm.
Rate Hike Expectations in Markets
According to CME FedWatch data, markets pushed the probability of a rate hike in September to a level near 50% following Warsh's remarks.
With the strengthening probability of a rate increase and the appreciation of the dollar, gold erased all the gains it had accumulated throughout the week and retreated.