Gold (XAU/USD) is attracting sellers early Monday, trading near $4,445 during Asian hours. The drop follows a surprisingly hawkish speech from Federal Reserve Chair Kevin Warsh at the Jackson Hole economic symposium on Friday — one that's forced traders to meaningfully rethink how close the Fed actually is to raising rates.

Warsh Says the Fed Still Has "Work to Do"

Warsh warned that inflation is not slowing significantly, and that unless policymakers become confident that it is, the central bank still has work to do. It's the closest he's come yet to openly acknowledging that further rate hikes may be needed to bring price pressures under control — a notable shift in tone from a Fed Chair who generally avoids giving markets explicit forward guidance.

The reaction in rate-hike odds was immediate. According to the CME FedWatch tool, markets now see a 56.9% probability of a US rate hike in September, up sharply from 39.9% before Warsh's comments, alongside an 88.7% probability of a December increase. Since gold pays no interest and is often used as an inflation hedge, higher rate expectations make it comparatively less attractive to hold — which explains Monday's selling pressure.

Independent analyst Tai Wong described the move bluntly, saying gold is getting "slapped hard" by Warsh's affirmation that inflation isn't meaningfully slowing. He added that the shift effectively puts the September meeting back in coin-flip territory for traders pricing in the next move.

A Renewed US Strike Adds to the Middle East Picture

Geopolitics is also back in the mix. Bloomberg reported on Sunday that the US military struck Iranian rocket launchers that were preparing to send mines into the Strait of Hormuz, following several weeks of relative calm. It marked the first US military action against Iran in more than a month, coming as President Trump has largely shifted toward an economic pressure campaign against Tehran rather than direct action. Ongoing Middle East tension of this kind typically raises the risk of oil-driven inflation — which, layered on top of Warsh's comments, adds another reason for traders to price in a firmer Fed stance rather than a softer one.

Just How Hawkish Was Warsh, Really?

By the numbers, Warsh's message landed on the hawkish side of recent Fed communication. His remarks scored 7.4 on the FXS Speechtracker, versus a 6.5 historical average. He pointed to healthy consumer spending, stable labor markets, and rapid business investment, while describing financial conditions as still restrictive despite being "hard-pressed" in that framing. Crucially, he stressed that better inflation prints over the summer don't yet represent a meaningful shift in the underlying trend, and that prices need to remain the Fed's predominant focus. His emphasis on a firm 2% PCE inflation target, alongside inflation expectations he characterized as durable-yet-fragile and limited signs of real policy restraint in credit and loan markets, all point toward keeping policy tight for longer — a backdrop that tends to support the Dollar over lower-yielding assets like gold.

The broader FXS Fed Sentiment Index held steady at 129.70, unchanged on the day but still firmly in hawkish territory. Taken together with the above-average Speechtracker score, the read is that Fed communication overall continues to lean hawkish, keeping the Dollar supported and markets on edge for the next piece of inflation data.

Can Gold's Rally Survive a More Hawkish Fed?

TD Securities sees this as a real test for gold's recent optimism, though not necessarily a fatal one. The bank argues that a more hawkish Warsh could act as a catalyst for some reversal in the metal, but stresses that the bar to fully undo the improved sentiment in precious metals remains fairly high, with underlying positioning and narratives still broadly supportive.

The Technical Picture

Gold still holds a bullish near-term bias on the daily chart, trading above both its 100-day moving average and the 20-day Bollinger middle band — evidence of a well-supported uptrend even amid this pullback. The Relative Strength Index sits at 54, keeping momentum mildly positive without flagging overbought conditions.

On the topside, immediate resistance sits at the 20-day Bollinger upper band near $4,725; a sustained break above that level would open the path to fresh record highs. On the downside, initial support is seen around the current area and the Bollinger middle band at $4,430, followed by the 100-day moving average at $4,370. A deeper pullback could extend toward the Bollinger lower band at $4,135, where buyers would be expected to step back in.

What This Means for Gold

Warsh's Jackson Hole comments have genuinely shifted the rate-hike conversation, and gold is feeling it directly. But the pullback so far looks more like a repricing of near-term risk than a structural break in the bullish trend — the metal remains above its key moving averages, and TD Securities' read suggests the broader positioning story hasn't flipped. The real test will be whether upcoming inflation data confirms Warsh's "work to do" framing or undercuts it.

What Traders Should Prepare For

  • Watch upcoming US inflation releases closely — a print that confirms Warsh's "work to do" framing could push September hike odds even higher.

  • Track further developments in the Strait of Hormuz; the US strike on Iranian rocket launchers suggests the relative calm of recent weeks may be ending.

  • Monitor the CME FedWatch tool's evolving odds for both the September and December meetings, since sentiment has already swung sharply once this week.

  • Watch $4,430 (Bollinger middle band) as the immediate support to hold, with $4,370 (100-day moving average) as the next line of defense.

  • On the upside, a break above $4,725 (Bollinger upper band) would be the signal that gold's bullish trend has reasserted itself despite Warsh's tone.

Warsh didn't announce a hike — he just made one sound plausible again. That's often enough to move gold, even before the Fed has actually decided anything.