Federal Reserve Chair Warsh's hawkish comments on inflation pushed traders to raise their bets on a September rate hike and sent gold tumbling. Spot gold was down 2.6% on the day, or more than $120, at $4,480 an ounce as of press time, after hitting a one-week low of $4,464 intraday. Independent analyst Tai Wong said Warsh's message that inflation has not slowed materially and that the Fed has "more work to do" triggered a violent selloff in the precious metal, though he noted the communication could still be "thunder without rain." Warsh's remarks were his closest public acknowledgment yet that additional monetary tightening may be needed, and he warned that if policymakers cannot be confident underlying inflation is returning to the 2% target, the Fed has more work ahead. Wong described the September meeting as a coin flip between hiking and pausing. Silver fell 3.63% to $66.77 an ounce, platinum slipped 0.27% to $1,841.9, and palladium pared its gain to 5.05% at $1,418.3.
Federal Reserve Chair Warsh signaled in an Aug. 29 speech that the central bank is not yet confident in its inflation fight, and traders responded by boosting bets on a September rate increase. The hawkish tone helped lift the dollar and sent gold into a steep decline.
Spot gold was down 2.6% on the day at press time, off more than $120 to $4,480 an ounce. It had earlier touched a one-week low of $4,464.
Warsh: Fed has "more work to do"
Independent analyst Tai Wong said Warsh's message was unmistakable: inflation has not slowed materially, and the Fed still has "more work to do." In Wong's view, that triggered a violent selloff in gold. He also cautioned that the communication may be "thunder without rain," but the market now sees September as a coin flip between hiking and pausing.
Warsh's remarks were his most explicit public acknowledgment yet that additional rate increases may be needed to ease price pressures. If policymakers cannot be confident that underlying inflation is steadily returning to the Fed's 2% target, he said, the bank has more work ahead.
Broader precious metals selloff
Silver dropped 3.63% to $66.77 an ounce. Platinum reversed an earlier gain to trade down 0.27% at $1,841.9. Palladium saw its advance narrow to 5.05%, bringing prices to $1,418.3.
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