Gold Prices Extend Decline as Rate Hike Expectations Intensify

Topline

Gold prices fell further on Tuesday morning, marking another consecutive day of losses after the precious metal reached a 15-week high in late August. The decline comes as market expectations for an imminent Federal Reserve interest rate hike—which typically weighs on non-yielding metals—continue to build.

Key Facts

As of 10:45 a.m. Tuesday, gold was trading around $4,414.50, down approximately 1.5%, after earlier touching a morning low of about $4,374.10, representing a 2.5% drop.

Silver was changing hands at roughly $65.01, down more than 2%, following an earlier session low of $64.35.

Both precious metals have trended downward daily since late last week, pulling back from the 15-week highs achieved recently. Analysts attribute this retreat primarily to growing expectations that the Federal Reserve will raise interest rates, potentially as early as its upcoming meeting later this month.

Ole S. Hansen, head of commodity strategy at Saxo Bank, noted that expectations of a rate hike are a primary driver depressing gold prices, alongside a strengthening U.S. dollar, which rose by about 0.1% on Tuesday morning.

Rate hike expectations strengthened significantly on Friday following comments from Federal Reserve Chair Kevin Warsh, who suggested the central bank may have “work to do” if inflation fails to return to its 2% target—a stance Hansen characterized as “hawkish.”

Why Was Gold Rising In August?

Gold experienced a notable rally throughout August, breaking out of a largely stagnant summer trend before beginning its descent late last week. Earlier this month, the Treasury Department’s announcement to increase buybacks of long-dated government debt was cited by analysts as a catalyst for gold’s price spike. Additionally, the metal reached a 15-week high last week, supported by a weakening U.S. dollar.

Will The Federal Reserve Raise Interest Rates This Year?

Following Warsh’s Friday speech, analysts now view a near-term rate hike as increasingly probable. According to CME Group’s FedWatch tool, the probability of a rate hike at the Fed’s September meeting rose to 66.2%, up from roughly 36% prior to the speech. The likelihood of a rate hike by the October or December meetings stands even higher at 75.9% and 89.7%, respectively.

Trump Weighs In on Interest Rates

President Donald Trump commented on interest rates on Monday evening, asserting that the United States should benefit from the “lowest interest rates anywhere in the world.” He remarked that in the past, strong economic data led to lower rates, but now, “they’re so afraid of inflation” that good numbers cause rates to rise. Despite criticizing the Fed’s stance, Trump expressed respect for Warsh, stating the Fed chair will “do what he has to do.” Trump has historically advocated for lower interest rates and frequently clashed with former Fed Chair Jerome Powell over monetary policy.

What to Watch For

Key economic releases this week are expected to influence metals prices. The ADP employment report is scheduled for Wednesday, while the Bureau of Labor Statistics’ monthly jobs report is set to release on Friday.

Market Context

Gold and silver prices remain below the historic peaks reached earlier this year. In January, gold peaked at approximately $5,600, and silver hit an all-time high of $121. The metals experienced a massive rally lasting several months between the previous year and early 2026, driven by factors such as tariffs, geopolitical tensions, technological demand, and interest rate cuts. Prices plummeted in late January after Trump nominated Warsh to lead the Fed, as he was perceived as less inclined toward aggressive rate cuts. Furthermore, metal prices have generally declined during the Iran conflict, trading inversely with oil prices, which have risen throughout the conflict.

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