Gold dropped to a two-week low early Monday, although it’s still heading for best month since January. The yellow metal extended last week’s losses as investors continued to bet on Federal Reserve interest rate hikes after Fed Chairman Kevin Warsh said the central bank might have more “work to do” in curbing inflation and tensions once again flared in the Strait of Hormuz over the weekend.
Warsh surprised investors on Friday in a speech at the Fed’s annual conference in Jackson Hole, Wyoming, when he showed more concern about inflation than had been expected. His comments triggered a sharp rally in short-term U.S. yields and the decline in gold.
December gold futures fell 3.2% last week to settle at $4,529.90 an ounce on Comex after the front-month contract declined 2.9% Friday. Bullion is up 10% this month after gaining 1.7% in July, its first monthly increase since February, and sliding 12% in June. It decreased 7% in the first half of 2026 after rallying 64% last year. The December contract is currently down $57.20 (-1.26%) an ounce to $4472.70 and the DG spot price is $4430.60.
Over 65% of the investors tracked by the CME FedWatch Tool now expect the Fed to raise interest rates by 25 basis points at its September policy meeting, up from 39.9% a week ago. The remaining 39.6% of investors are betting on rates to remain unchanged next month.
The central bank held interest rates steady at 3.5% to 3.75% last month, but dissenters signaled growing support for a rate hike in 2026, and the minutes indicated broader support for rate increases if inflation doesn’t go down. Raising rates would likely be bearish for gold, as higher rates make gold a less attractive asset for investment.
The Fed has kept interest rates unchanged this year after three previous rate cuts.
The Fed closely watches both inflation and labor market data when setting interest rates. The key monthly U.S. jobs report for August is due out on Friday, with the private payrolls report from ADP coming out two days before that, on Wednesday.
The personal consumption expenditures price index, the Fed’s favorite inflation measure, came in Wednesday with July data showing the 12-month inflation rate was 3.7%, unchanged from June but still well above the Fed’s 2% target. Economists had forecast the figure to come in at 3.6%. Excluding volatile food and energy prices, core PCE advanced 3.3% year on year. The report also showed that consumer spending was flat in July after strong increases in May and June. The figures point to a cooling economy.
Investors are also continuing to watch inflationary risk from the war in Iran and the subsequent closure of the Strait of Hormuz. Iran and the U.S. exchanged tit-for-tat strikes Sunday in the first escalation between the two sides in more than a month. Hawkish news from the Iran war has pressured gold prices since the war began six months ago.
December silver futures dropped 3.6% last week to settle at $67.79 an ounce on Comex after the front-month contract fell 3.5% Friday. The most-active contract touched a record above $115 in January. Silver is up 17% this month after sliding 3.6% in July and declining 21% in June. It lost 15% in the first half of 2026 after rising 141% last year. The December contract is currently down $0.691 (-1.02%) an ounce to $67.095 and the DG spot price is $66.30.
Spot palladium added 6.3% last week to $1,433.00 an ounce after climbing 6.5% Friday. Palladium is up 11% this month after adding 5.8% in July and dropping 11% in June. It retreated 25% in the first half of 2026 after rising 74% last year. Currently, the DG spot price is down $64.40 an ounce to $1370.50
Spot platinum fell 2.1% last week to $1,849.30 an ounce and slipped $1.30 Friday. Platinum is up 11% this month after gaining 6.6% in July and tumbling 19% in June. Platinum slid 23% in the first half of 2026 after increasing 122% in 2025. The DG spot price is currently down $59.30 an ounce to $1792.00.
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