Why did gold prices fall nearly 6% over three sessions, and what key market conditions contributed to this decline?

Gold prices fell nearly 6% over three sessions to a two-week low—trading around $4,330 an ounce—due to a confluence of factors: escalating Middle East conflict (including renewed US-Iran strikes), a global bond selloff pushing long-dated US Treasury yields to their highest since 2008 (with 30-year yields exceeding 5.28%), a strengthening US dollar, and rising market bets that the Federal Reserve will hike interest rates at its September 15–16 meeting (to nearly 70% likelihood). These conditions collectively increased pressure on non-yielding assets like gold, as higher yields and rate-hike expectations erode gold’s relative appeal.

What role did Fed Chair Kevin Warsh’s comments and the US-Iran military escalation play in shifting market expectations for interest rates?

Fed Chair Kevin Warsh’s Friday statement—where he 'doubled down on his vow to fight inflation'—combined with the resumption of US-Iran strikes after a near monthlong lull, directly intensified market expectations of a Federal Reserve rate hike. The renewed military escalation heightened fears of sustained inflationary pressure, particularly via rising oil prices, while Warsh’s hawkish stance signaled policy resolve; together, they drove traders to ramp up bets on a rate increase at the upcoming September 15–16 meeting to a likelihood of almost 70%.

Gold Holds Losses as Higher Oil, Bond Selloff Raise Rate-Hike Bets

Sep 1, 2026

Gold prices declined amid Middle East tensions and a bond selloff, increasing bets on Federal Reserve interest rate hikes. Rising oil costs and inflation concerns pushed yields to multi-year highs, impacting monetary policy expectations.

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