Overview
Gold prices steadied on Monday after a sharp 3.2% sell‑off on Friday, with the spot XAU/USD quote up 0.2% to $4,464.65 per ounce at 20:53 ET (00:53 GMT). Futures slipped 0.4% to $4,513.50. Despite the recent dip, gold remains roughly 10% higher in August, on track for its strongest monthly gain since January.
Fed Rate Outlook
Federal Reserve Governor Kevin Warsh warned that the Fed “still has work to do” to bring inflation back to its 2 % target. The hawkish comment lifted market expectations for a September rate hike to about a 57 % probability, according to CME’s FedWatch tool. Higher‑rate expectations reduce demand for non‑interest‑bearing bullion and support a stronger US dollar, which fell 0.1 % to 99.60 on the Dollar Index.
Commodity and Currency Influences
- Brent crude rose to approximately $89.38 a barrel and US West Texas Intermediate reached $84.50 a barrel after U.S. forces struck Iranian launchers on Larak Island and Iran subsequently attacked U.S. forces in Jordan, keeping energy prices elevated.
- Silver (XAG/USD) gained 0.4% to $66.64 per ounce and platinum (XPT/USD) advanced 0.7% to $1,835.35 per ounce.
- The US Treasury’s unexpected increase in purchases of longer‑dated government bonds earlier in the month pushed yields lower and weakened the dollar, reviving the “debasement” narrative that has underpinned gold’s roughly 65 % rally in 2025.
Market Commentary
ANZ analysts said the sharp decline reflected the shift in monetary‑policy expectations, but they expect the downside to be limited as the debasement trade continues to attract buyers. They note that fiscal‑deficit and currency‑depreciation concerns that originally drove the rally remain in place.
Outlook
Traders will watch upcoming US employment and inflation releases for clues that could either reinforce the September hike case or temper the current hawkish positioning.