Gold futures fell on Monday but were still on track to close out their best month since February, with the precious metal posting gains of nearly 10% in August despite a sharp pullback triggered by hawkish commentary from Federal Reserve Chairman Kevin Warsh.

Market Context

The broader commodities complex faced headwinds as investors recalibrated expectations for monetary policy following Warsh's remarks at the Jackson Hole symposium. The Fed chair signaled that interest rate increases could be necessary to bring inflation under control, sending gold futures tumbling more than 3% on Friday. Meanwhile, escalating geopolitical tensions in the Middle East added another layer of complexity to the market, as U.S. strikes on Iranian rocket launchers in the Strait of Hormuz region reignited inflation fears and pushed oil prices higher.

Analysis

The tug-of-war between safe-haven demand and rate hike concerns has defined gold's August trading session. Despite Warsh's hawkish pivot, which prompted Polymarket bettors to assign a 56% probability that the Fed will hike rates by 25 basis points at its September meeting, the precious metal has managed to hold onto substantial gains for the month. Goldman Sachs strategists maintain their bullish outlook, forecasting gold will rise to $4,900 per troy ounce by the end of 2026 as central banks continue diversifying their reserves away from dollar-denominated assets. TD Securities Macro Research head of commodity strategy Bart Melek cautioned that the Fed's firm restatement of its commitment to price stability means "debasing trade narratives" may be tuned out going forward, suggesting higher rates could weigh on non-yielding assets like gold. Veteran strategist Ed Yardeni, however, sees central banks using pullbacks as buying opportunities, maintaining his $5,000 target by year-end.

Key Numbers

- Gold futures for December delivery: hovered near $4,481 per troy ounce on Monday

- August gain: nearly 10% month-to-date

- Friday decline: more than 3% following Warsh's Jackson Hole remarks

- Goldman Sachs year-end price target: $4,900 per troy ounce

- Polymarket Fed rate hike probability for September: 56% (25 basis points)

- Ed Yardeni year-end target: $5,000 per troy ounce

What to Watch

Markets are pricing a 56% probability of a 25 basis point Fed rate hike at the September meeting, with traders monitoring upcoming CPI and jobs data that could shift rate expectations ahead of Warsh's decision. On gold, the psychological $4,500 level represents key resistance toward Goldman Sachs' $4,900 target, while downside support sits around the prior breakout zone near $4,200.