Gold slipped on Monday as investors reassessed the Federal Reserve's rate path following Chair Kevin Warsh's hawkish inflation message, with rising oil prices adding to inflation concerns. The metal still remains on track for its strongest monthly gain since January despite the pullback.
Gold fell 0.4% to $4,438.30 an ounce as of 05:01 ET on Monday, while Gold Futures declined 0.9% to $4,488.41. Despite the pullback, gold remains about 10% higher in August and is heading for its strongest monthly gain since January.
Silver moved the other way. XAG/USD rose 1.0% to $67.04 an ounce, while XPT/USD fell 1% to $1,805.69. The US Dollar Index fell 0.1% to 99.6.
Warsh's inflation stance revives rate hike bets
Gold's retreat follows a sharper move on Friday, when the metal fell 3.2%, its biggest daily decline since early June, after Warsh said the Fed still has work to do to bring inflation back to its 2% target. His comments pushed investors to raise expectations for another rate increase, with markets now pricing roughly a 57% probability of a September hike, according to CME's Fedwatch tool.
That shift weighs on bullion because gold does not pay interest. When traders expect rates to stay higher, interest-bearing assets such as government bonds become relatively more attractive. The stronger dollar that followed Warsh's remarks also tends to pressure gold, since the metal becomes more expensive for buyers using other currencies.
ANZ analysts said the latest retreat reflects precisely that shift: gold fell sharply after Warsh's inflation warning increased expectations of rate hikes later this year and reduced investor demand. Still, they expect the downside to remain limited as the debasement trade continues to attract buyers.
Oil strikes add to inflation pressure
Energy markets are adding to the pressure. Brent crude rose to around $89.38 a barrel on Monday and U.S. crude reached $84.50, after U.S. forces struck Iranian launchers on Larak Island on Sunday. Iran then attacked U.S. forces stationed in Jordan, according to reports, adding to concerns that the conflict could intensify and keep energy prices elevated.
Treasury intervention keeps the debasement trade alive
Gold's August rally gained fresh momentum earlier this month after the U.S. Treasury unexpectedly increased its purchases of longer-dated government bonds. The intervention pushed yields lower and weighed on the dollar, while also reviving concerns that rising government debt and efforts to manage borrowing costs could weaken confidence in U.S. assets.
That has brought the debasement trade back into focus. The theme helped drive gold's roughly 65% rally in 2025, as investors used bullion as a hedge against the risk of widening budget deficits, currency depreciation and declining purchasing power. ANZ now sees the recent hawkish shift in monetary policy as a risk to that demand, but argues the fiscal and currency concerns that underpin the debasement trade remain in place.
The metal had rebounded sharply from its late June low near $3,942 before Friday's selloff, while renewed central bank and investor demand had helped push it well above the $4,000 threshold.
Source: Investing.com
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