Gold prices drop 1% as Warsh says inflation a bigger concern than slowing labor market - KITCO

Gold fell about 1% after former Federal Reserve governor Kevin Warsh said inflation remains a greater concern than a slowing labor market. His remarks signal a preference for keeping monetary policy restrictive even if employment data softens, reducing the market’s appetite for assets that thrive on lower rates.

For gold, the reaction highlights a central tension. While bullion is often seen as an inflation hedge, higher-for-longer interest rates raise the opportunity cost of holding non-yielding assets and usually support the U.S. dollar, which pressures dollar-denominated metals. Warsh’s comments imply that near-term rate cuts are unlikely, a scenario that tends to weigh on gold prices.

Going forward, traders will watch upcoming inflation and jobs reports for clues on how policymakers balance their dual mandate. If labor market weakness becomes more pronounced, rate-cut expectations could return and offer gold support. Conversely, stubborn inflation may keep gold under pressure. For now, sentiment depends heavily on which data point moves the Fed’s needle next.