According to foreign media reports, spot gold fell 0.3% to $4,439.31 per ounce. Earlier in the session, gold prices had dropped to their lowest level since August 19.
Gold had already declined by more than 3% last Friday, shifting investors’ focus toward the Federal Reserve’s upcoming monetary policy and interest rate decision.
The latest decline has been linked to comments by US Federal Reserve Chairman Kevin Warsh, who signalled a potentially tighter monetary policy. Speaking at the Jackson Hole Economic Symposium, Warsh said the Fed may need to take further action if it does not gain sufficient confidence that inflation is moving toward its 2% target.
Higher interest rates generally weigh on gold because the precious metal does not pay regular interest or dividends, making it less attractive compared with interest-bearing assets.
Markets are currently pricing in around a 60% probability of a US interest rate hike in September.
Meanwhile, rising tensions in the Middle East have also affected global financial markets. Growing tensions between the United States and Iran have pushed oil prices higher, raising concerns about renewed inflationary pressures worldwide.
Analysts say that if higher oil prices persist, central banks could face greater pressure to keep interest rates elevated or raise them further to control inflation, which could remain a negative factor for gold prices.
