Gold slips below $4,300 as hawkish Fed bets lift dollar

Gold traded under $4,300 an ounce on Sept. 2, down from $4,376.81 a day earlier, as Federal Reserve rate-hike bets strengthened the dollar.

Warsh said PCE inflation is running at 3.7 percent over the past year and at a 4.1 percent annualized pace over the past six months. "We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do," Warsh, who took office in May, said in his Aug. 28 Jackson Hole speech.

Futures pricing put the chance of a September hike at 59 percent, up from 35 percent on Aug. 27, according to CME Group data. The policy-sensitive two-year Treasury yield rose as much as 9 basis points to 4.32 percent, while the dollar gained 0.4 percent. The 10-year yield climbed toward 4.8 percent, near the highest since early 2025.

Gold, priced in dollars, becomes costlier for holders of other currencies when the greenback firms, and higher yields raise the opportunity cost of holding the non-yielding metal. The next test comes with US labor-market data this week, which could shift rate expectations and determine whether gold holds above the $4,300 psychological level.

September Hike Odds Jump to 59 Percent

Traders on Polymarket pushed the odds of a 2026 rate increase as high as 69 percent, up from roughly the mid-50s on Aug. 27, according to prediction-market data. Warsh described the labor market as consistent with full employment, with unemployment at 4.1 percent and jobless claims near their lowest levels in decades, and said he would be "hard pressed to describe broad financial conditions as restrictive."

The dollar index has risen several percentage points against a basket of major currencies since late 2024, reflecting confidence in the US economy's resilience. The move has rippled across global markets: Japan's 10-year government bond yield touched 3 percent for the first time since 1996, while Brent crude held near $94 a barrel after rising 1.5 percent on renewed US-Iran tensions.

Gold's slide from $4,376.81 leaves the metal about 2 percent below that level, with dollar momentum and COMEX positioning likely to dictate the next leg. Priya Misra, a portfolio manager at JPMorgan Asset Management, called the remarks a "hawkish speech," while Matthew Amis, investment director at Aberdeen, told the Financial Times the address "sets up a September meeting where if they don't hike, credibility will take another bashing."

This article is for informational purposes only and does not constitute investment advice.