FX.co ★ Der | XAU/USD, GOLD

Gold prices (XAU/USD) experienced a sharp sell-off on Friday, extending daily losses to over 2.50% as financial markets digested surprisingly hawkish commentary from Federal Reserve Chair Kevin Warsh during his address at the Jackson Hole Economic Symposium. The precious metal tumbled from an intraday peak of $4,629 to trade near $4,473, driven lower by a rapid surge in U.S. Treasury yields and a strong rally in the U.S. Dollar. Chair Warsh underscored price stability as the central bank’s top imperative, explicitly noting that underlying inflation metrics have failed to show convincing improvement and warning that if inflation does not reliably head toward the Fed’s 2% target, policymakers still "have work to do." Although Warsh conceded that consumer spending remains healthy and the labor market solid, his emphasis on persistent inflationary pressures signaled that monetary policy tightening remains firmly on the table. In response, money markets aggressively repriced the path of interest rates; Prime Terminal data revealed that odds of a 25-basis-point rate hike at the upcoming September 16 meeting spiked from 34% a day earlier to as high as 50% immediately following his speech, before settling near 44%, while the probability of a hike by December surged to 82%. This hawkish pivot reinvigorated the U.S. Dollar Index (DXY), which advanced over 0.60% to reach 99.72, anchored by a 5.5 basis point jump in the benchmark 10-year U.S. Treasury yield to 4.728%. Because non-interest-bearing bullion faces diminished appeal when real yields rise, this rate repricing sparked immediate selling pressure across precious metals. The sharp market reaction to Warsh's speech eclipsed several economic releases that offered a more nuanced picture of the U.S. economic backdrop. The annual benchmark revision to Nonfarm Payrolls showed a net reduction of 79,000 jobs, falling short of expectations for a positive 183,000 reading, though marking a substantial improvement from the prior revision's steep -911,000 print. Concurrently, the final University of Michigan Consumer Sentiment index for August registered at 51.7—slightly beating consensus estimates of 51, yet reflecting a broader retreat from July's levels. On the inflation outlook front, U.S. households surveyed by the University of Michigan saw one-year inflation expectations ease slightly from 4.2% to 4%, while five-year inflation expectations held steady at 3.3%, matching forecasts. Despite these mixed economic indicators, the primary market driver remained the hawkish trajectory outlined by the Federal Reserve, which effectively offset softer economic prints and forced leveraged long positions to liquidate as real yields moved higher. From a technical chart perspective, gold's sudden drop below the psychological $4,500 threshold represents a notable shift in short-term momentum, though broader higher-timeframe structures remain intact. Price action initially fell below the 200-day Simple Moving Average (SMA) near $4,527, reaching intraday lows before staging a partial recovery back toward the $4,550 zone following initial volatility. Momentum indicators reflect this shift in market dynamics: while the 14-day Relative Strength Index (RSI) remains above its 50 midline to indicate that macro buyers retain underlying control, the indicator has been trending lower, confirming that short-term sellers have taken charge. The downside break beneath the 200-day SMA opened the door toward $4,473, with technical analysts identifying the 100-day SMA at $4,374 as the next major structural demand layer should selling pressure persist. Conversely, for bulls seeking to regain control, immediate resistance sits at $4,500, followed closely by the 200-day SMA at $4,527 and the $4,600 psychological barrier. Reclaiming these levels would be required to pave the way for a retest of the August 27 high at $4,643 and a potential push toward the $4,700 mark.