(Bloomberg) — Gold steadied after falling more than 3% on Friday as US Federal Reserve Chairman Kevin Warsh’s pledge to fight inflation lifted bets the US central bank will raise interest rates.
Bullion was trading around $4,450 an ounce, after falling the most since early June in the previous session. Warsh reiterated at the Fed’s annual conference in Jackson Hole, Wyoming that policymakers will return inflation to their 2% goal, which he said was a firm and fixed target. Traders are now pricing in a more than 50% chance of a hike at the Fed’s next meeting in September.
A jump in oil prices added inflationary pressure, after the US military struck Iranian rocket launchers it said were preparing to send mines into the waterway on Sunday. It was the first American military action against Iran in more than a month, after President Donald Trump had switched to a campaign of squeezing the Islamic Republic economically.
Bullion is up around 10% in August, heading for the biggest monthly gain since January, with prices surging after the US Treasury’s surprise announcement mid-month to ramp up bond buybacks. The intervention to rein in borrowing costs revived the so-called debasement trade, driven by concerns over rising sovereign debt and currency devaluation, a theme that helped fuel gold’s 65% rally in 2025.
The dovish Treasury and hawkish Federal Reserve are in a “tug of war,” Nicky Shiels, head of research and metals strategy at MKS PAMP SA, said in a note. The debasement trade is likely to continue into September as the US Treasury starts bond buybacks and ahead of the Fed meeting, which will support gold, she added.
Spot gold was 0.1% lower at $4,453.08 an ounce at 9:22 a.m. in Singapore. Silver was down 0.1% at $66.29 an ounce. Platinum was little changed and palladium down 2%. The Bloomberg Dollar Spot Index, a gauge of the US currency, was marginally lower after rising 0.4% the previous session.
–With assistance from Wendy Wells.
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