Gold (XAU/USD) couldn't hold onto Monday's bounce from sub-$4,400 levels — a one-and-a-half-week low — and is attracting fresh sellers again during Tuesday's Asian session. The renewed pressure traces directly back to Fed Chair Kevin Warsh's hawkish comments last Friday, which lifted market bets for an imminent interest rate hike and, in turn, undermined demand for the non-yielding metal.
Warsh's Hawkish Debut Keeps Weighing on Gold
Warsh delivered a surprisingly hawkish debut speech at the Jackson Hole Symposium, signaling that the central bank may consider raising rates if inflation doesn't slow down significantly. That message hasn't faded — if anything, it's compounding with a second inflation worry: rising energy prices tied to escalating US-Iran tensions have revived fears of persistent inflation and added further fuel to rate-hike bets.
According to CME Group's FedWatch Tool, traders are now pricing in around a 65% chance that the Fed will raise borrowing costs at the upcoming policy meeting on September 15–16. That, combined with ongoing geopolitical uncertainty, is helping the safe-haven US Dollar regain positive traction after Monday's slide — and a firmer Dollar is a direct headwind for gold.
A Weekend of Escalation in the Middle East
The geopolitical backdrop took a sharp turn over the weekend. US forces struck two rocket launchers on Iran's Larak Island in the Strait of Hormuz on Sunday — the first US strike since late July. Iran responded with a counterattack on American air bases in Jordan, and separately said on Monday that it had attacked the United Arab Emirates' Al Minhad Air Base with drones. President Trump warned that further military action remained possible and threatened to hit Iran "hard" if needed.
That sequence of strikes and counterstrikes keeps the geopolitical risk premium firmly in play, and it's doing double duty in the market right now: lending support to crude oil prices while also reinforcing the safe-haven bid for the Dollar. Both of those dynamics work against gold rather than for it, since higher energy prices raise inflation concerns that support the case for a Fed hike, and a stronger Dollar directly weighs on gold's price.
A Busy Week of US Data Looms
With so much riding on incoming data, traders appear reluctant to place aggressive directional bets ahead of a packed macro calendar. The week kicks off with the US ISM Manufacturing PMI and JOLTS Job Openings, both due later Tuesday. The main event, though, is Friday's Nonfarm Payrolls (NFP) report — the closely watched monthly employment release that could either reinforce or challenge the current hawkish Fed narrative.
What This Means for Gold
Right now, nearly every major input is working against gold at once: hawkish Fed signaling, rising rate-hike odds, a firming Dollar, and a Middle East conflict that's adding to inflation concerns rather than easing them. Taken together, the fundamental backdrop clearly favors Dollar bulls, and the path of least resistance for gold looks tilted to the downside for as long as this combination holds. The one thing that could shift the picture quickly is Friday's jobs report — a weak print would undercut the case for a September hike and could give gold room to stabilize.
What Traders Should Prepare For
Watch Tuesday's ISM Manufacturing PMI and JOLTS Job Openings for early signals on how the labor market and broader economy are holding up heading into NFP week.
Mark Friday's Nonfarm Payrolls report as the week's key event — it's likely to be the single biggest catalyst for whether the 65% September hike odds hold, rise, or fade.
Track any further military exchanges between the US, Iran, and their regional allies; Trump's warning of hitting Iran "hard" suggests this weekend's strikes may not be the last.
Keep an eye on the Dollar Index for confirmation of the current safe-haven bid, since continued USD strength would keep direct pressure on gold.
Be prepared for choppy, lower-conviction price action into Friday, as traders are already signaling they'd rather wait for the NFP data than commit to a direction now.
Hawkish Fed talk and a live military exchange rarely pull gold in the same direction — but this week, both are pushing it down. Friday's jobs report is the one release that could change that.