Gold prices drop 1% as Warsh says inflation is a bigger concern than a slowing labor market

Gold prices experienced sharp selling pressure, falling over 1% on the day as Federal Reserve Chair Kevin Warsh signaled a hawkish stance on inflation during his speech at the annual Central Bank Symposium in Jackson Hole, Wyoming. Warsh highlighted that price stability remains the primary concern for the central bank compared to the cooling labor market, emphasizing the Fed's dedication to restoring inflation to its 2% target. He cited concerning metrics, noting that the 12-month change in the PCE price index stands at 3.7%, with the six-month figure elevated at 4.1%. Although Warsh refrained from giving explicit forward guidance on future monetary policy, market participants interpreted his inflation emphasis as a clear tightening bias. In response, traders quickly began pricing in potential interest rate hikes as soon as next month, applying downward pressure across precious metals. Spot gold dropped sharply below the $4,600 per ounce threshold to trade around $4,552.00 an ounce as rate expectations lifted yield prospects and dampened gold's non-yielding appeal.