gold
Gold’s rapid August rally has come under pressure after a hawkish signal from Fed Chair Kevin Warsh strengthened the U.S. dollar, although persistent Chinese buying and the broader monthly gain continue to support the bullish case for bullion.
Written by:
Skerdian Meta
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Sunday, August 30, 2026
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3 min read
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Last updated: Sunday, August 30, 2026
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Gold’s rapid August rally has come under pressure after a hawkish signal from Fed Chair Kevin Warsh strengthened the U.S. dollar, although persistent Chinese buying and the broader monthly gain continue to support the bullish case for bullion.
Gold Price Reverses From $4,700
Gold climbed close to $4,700 early last week before suffering a sharp reversal on Friday, falling toward $4,450.
The decline followed Federal Reserve Chair Kevin Warsh’s speech at Jackson Hole, where his comments were interpreted as significantly more hawkish than markets had anticipated.
Warsh repeatedly emphasized that the U.S. economy remains strong and that underlying inflation is still too high. Although he stopped short of explicitly signaling an imminent rate hike, he stressed that the Federal Reserve would ultimately achieve its inflation target.
That message was enough to dramatically change interest-rate expectations.
September Rate-Hike Bets Surge
Markets initially expected Warsh to provide limited guidance on monetary policy. Instead, his comments reinforced concerns that the Federal Reserve could maintain a restrictive stance for longer.
Pricing for a September rate hike has subsequently increased to approximately 57%, compared with around 33% before his speech.
The repricing has provided a significant boost to the U.S. dollar.
A stronger dollar typically creates additional pressure on gold because bullion is priced in dollars and becomes more expensive for international buyers. Higher interest-rate expectations can also weigh on gold by increasing the opportunity cost of holding a non-yielding asset.
This combination explains much of Friday’s sharp decline.
August Rally Remains Intact
Despite the latest selloff, gold remains higher for August following an exceptionally strong rally earlier in the month.
The longer-term bullish structure has not necessarily been invalidated by one sharp reversal. Instead, the market is entering a period where monetary policy expectations could become increasingly important.
The next major catalyst will be the U.S. employment report.
August Jobs Report Becomes Crucial
Markets will focus heavily on the August nonfarm payrolls report on September 4, which will be the final major monthly labor-market release before the Federal Reserve’s September 15–16 policy meeting.
July’s employment figures showed unexpected weakness. U.S. nonfarm payrolls fell by 23,000, while May and June employment figures were revised lower by a combined 103,000.
The unemployment rate nevertheless declined from 4.2% to 4.1%, while labor-force participation slipped to 61.4%. Average hourly earnings increased 3.2% year over year.
The August report will help determine whether July represented temporary weakness or evidence of a broader cooling in the U.S. labor market.
A strong rebound in payrolls could reinforce Warsh’s hawkish position and provide further support for the dollar. Conversely, another weak employment report could revive expectations for rate cuts and potentially provide gold with fresh upside momentum.
Technical Outlook Is Still Bullish
Gold’s recovery from below $4,000 has changed the near-term technical structure.
The decisive move above the rising 20-day moving average and subsequent break toward $4,700 suggested that buyers have regained control. However, the speed of the August advance also increased the risk of short-term profit-taking which happened on Friday.
The $4,400 area is now an important level to watch. Holding above it could strengthen the case for another push toward the previous record highs.
On the downside, the $4,000 zone remains the major support area. A return toward that level would represent a significant test of the recovery and the broader bullish structure.
China Provides Gold Demand Support
Physical demand from China is providing another important source of support.
China reportedly purchased more than 40 tonnes of gold through the London over-the-counter market in June, representing its second-largest monthly purchase since early 2025.
The reported buying has attracted attention because it exceeded the amount officially disclosed by the People’s Bank of China, potentially indicating that China’s overall accumulation is larger than public reserve data suggests.
China has now maintained a gold-buying streak for roughly 20 months, highlighting its continued strategic interest in bullion.
Gold Faces a Critical Policy Test
Gold’s retreat toward $4,450 demonstrates how quickly monetary-policy expectations can reverse momentum in the precious-metals market.
Warsh’s hawkish comments have strengthened the dollar and increased expectations for tighter policy, creating a significant headwind for bullion.
However, strong Chinese demand, geopolitical uncertainty and concerns surrounding fiscal policy continue to provide underlying support.
The September jobs report could therefore become decisive. A strong labor-market rebound could extend the recent gold correction, while renewed signs of weakness could bring buyers back into the market.
For now, gold’s August rally remains intact, but the move from nearly $4,700 to $4,450 shows that the bullish trend is facing a significantly tougher test as investors reassess the Federal Reserve’s next move.
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Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst.
Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank’s local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.