Gold tumbles as Warsh fuels September rate-rise bets
Spot gold fell 2.9% to US$4,567.23 an ounce as traders put a 58% chance on a September rate increase and the dollar strengthened
Gold reversed course and fell by more than 3% at one stage on Friday (August 28, 2026) after Federal Reserve chair Kevin Warsh’s comments on inflation prompted traders to increase bets on a US interest-rate rise.
Spot gold was down 2.9% at US$4,567.23 an ounce by 1.44pm US Eastern time (5.44pm GMT), its lowest level since August 20, Reuters reported.
US gold futures for December delivery settled 2.9% lower at US$4,529.9.
Bullion lost 2.9% over the week, retreating after reaching a more than three-month high of US$4,696.18 on Tuesday.
“Gold was hit hard after Chair Warsh stressed that inflation had not slowed meaningfully and that the Fed still ‘has work to do’,” independent metals trader Tai Wong said.
“It may still be more bark than bite, but it leaves the September meeting finely balanced.”
September rate odds jump
Traders increased their expectations of a September rate rise after Warsh said the Fed would have “work to do” unless policymakers were confident that underlying inflation was returning to the central bank’s 2% target.
His comments were the clearest indication yet that he believed an increase in borrowing costs might be required to ease price pressures.
The CME FedWatch Tool showed that markets were pricing in a 58% probability of a September increase, up from 36% before Warsh’s remarks. The probability of an increase by December stood at 89%.
Higher interest rates generally reduce gold’s appeal because the metal pays no interest, making income-generating assets more attractive by comparison.
The US dollar also climbed to its highest level in more than a week, adding further pressure by making dollar-denominated gold more expensive for buyers using other currencies.
Palladium defies precious-metals sell-off
Discounts offered by gold dealers in India deepened sharply during the week as demand weakened. Traders were also assessing speculation that the government might reverse its recent increase in import duties.
Spot silver fell 3.5% to US$66.81 an ounce, while platinum declined 0.6% to US$1,835.07.
Palladium moved against the wider sell-off, climbing 5.3% to US$1,422.25 an ounce.
