Finance

In a pivotal address at the Jackson Hole economic symposium, Federal Reserve Chairman Kevin Warsh reinforced the central bank's unwavering focus on combating persistent inflation. His explicit remarks regarding target price levels led to a sharp shift in market expectations, with Fed funds futures indicating a roughly 58% probability of an upcoming interest rate hike in mid-September. The hawkish commentary caused short-term bond yields and the U.S. dollar to strengthen while triggering a broad cooling trend in risk assets.

Spot gold experienced a steep daily decline of more than 3%, settling near $4,454 per ounce as investors reacted to potential monetary tightening. The drop came on the heels of statements from the Federal Reserve implying that further interest rate increases may be necessary to curb stubborn inflation. Because gold yields no interest, the rising probability of elevated borrowing costs quickly stripped momentum from the precious metal, though certain mining equities managed to protect historic monthly gains.

Digital assets pulled back sharply toward the end of the week as the prospect of tighter central bank policy dampening market liquidity sparked sudden selling. Bitcoin gave up its brief move above $81,000 to slide under the $78,000 threshold, while Ethereum registered a parallel decline to end near $2,443. The downward pressure fully interrupted a mid-week rally that had been buoyed by multiple consecutive sessions of positive net inflows into U.S. spot cryptocurrency ETFs.