Eco
Gold prices fell on Monday to their lowest level in approximately two weeks, influenced by statements from Kevin Warsh, Chairman of the Federal Reserve (US Central Bank), who hinted at the necessity of raising interest rates to curb inflation. Simultaneously, escalating tensions in the Middle East exacerbated inflation concerns. The spot price of gold dropped by 0.8 percent, recording $4417.04 per ounce by 04:06 GMT, marking its weakest level since August 19, following a decline of over three percent on Friday. US gold futures also fell by 1.4 percent to $4466.80. In his analysis, Tim Waterer, a senior market analyst at KCM Trade, explained that "gold is still reacting to the hawkish rhetoric adopted by Warsh in Jackson Hole." He added that "US military action in Iran intensified pressure on oil prices, exacerbating gold's struggles from an inflation perspective." Despite gold being considered a hedge against inflation, it typically loses its appeal in a high-interest-rate environment as it yields no return. Warsh stated on Friday at the Jackson Hole Economic Symposium that the Federal Reserve "has much work to do" unless policymakers gain confidence that inflation is moving towards two percent, which is the closest acknowledgment yet that interest rate hikes may be necessary. Current market forecasts indicate a 60 percent probability of the US central bank raising interest rates in September, according to CME's FedWatch tool. Separately, US President Donald Trump announced via social media that Kharg Island, Iran's energy hub, was being destroyed. This followed US forces targeting two missile launch platforms on another island in the first known US airstrikes on Iran since late July, which drove oil prices up by more than two percent. A series of US labor market reports are due this week, including job vacancies, the ADP employment report, weekly jobless claims, and non-farm payrolls data. Waterer commented that "the non-farm payrolls data is likely to either extend gold's post-Jackson Hole decline or provide a catalyst for a short-covering bounce." As for other precious metals, silver's spot price fell 0.4 percent to $66.10. Platinum dropped 1.3 percent to $1797.03, and palladium declined 2.5 percent to $1386.96.
