Warsh's Hawkish Stance Boosts Rate Hike Bets, Spot Gold Drops Over $120 Intraday

On August 29, after Fed Chair Warsh's speech on curbing inflation pressures, market bets on Fed rate hikes significantly increased, the dollar strengthened, and gold and other precious metal prices fell sharply. Spot gold dropped 2.6% intraday, losing over $120, to $4,480 per ounce, after touching an intraday low of $4,464, a one-week low. Independent analyst Tai Wong noted: "Chair Warsh clearly stated that inflation has not shown substantial easing and emphasized that the Fed 'still has work to do,' triggering a sharp selloff in the gold market. Although this may still be a 'loud thunder, small raindrops' communication strategy, it is enough to make the market view the September meeting as a coin flip between a hike and a pause." Warsh's remarks are his closest public statement yet to acknowledging that further rate hikes may be needed to ease inflation pressures.