Gold prices dropped on Friday to snap a three-week winning streak, recording a weekly loss of over 3%. The sell-off was triggered by hawkish remarks from Federal Reserve Chair Kevin Warsh, who emphasized that central bankers still have work to do to bring core inflation back to the target level. Consequently, financial markets began pricing in higher odds of a September rate hike. The prospect of persistently elevated borrowing costs severely weakened bullion's attractiveness as a non-yielding asset. Simultaneously, the U.S. dollar rallied to its strongest level in over a week, applying further downward pressure by making dollar-denominated commodities more expensive for international investors. December gold futures fell nearly 2.9% for the session to settle around $4,529.90 per ounce, while silver futures dropped over 3.5%. Moving forward, market participants will closely monitor upcoming inflation data and U.S. macroeconomic releases to gauge the Federal Reserve's monetary policy path. Continued dollar strength and hawkish Fed signals may keep precious metals under pressure in the short term, requiring traders to watch key support levels for gold and silver.
