Gold prices jumped over 2% to $4,090 per ounce on Wednesday, rebounding from an eight-month low, following comments from new Federal Reserve Chair Kevin Warsh. Speaking at the ECB’s annual forum in Sintra, Portugal, Warsh acknowledged that inflation risks and expectations have softened recently. This shift in rhetoric from the Fed chair, who was sworn in on May 22, 2026, and previously caused market jitters with a more hawkish stance, led traders to believe that the likelihood of aggressive rate hikes might be diminishing, despite the Fed's commitment to a 2% inflation target.
Warsh also reiterated his decision to abandon traditional "forward guidance" on interest-rate policy. This move towards less predictability in Fed communications means markets will scrutinize every statement for clues on future policy. Investors, however, continued to factor in US rate hikes this year to curb inflation, with the CME FedWatch tool indicating about a 67% chance of a September rate increase. The rally in gold was also boosted by weaker-than-expected US jobs data.
Tai Wong, an independent metals trader, noted that a lower-than-expected ADP national employment report, showing private employment increasing by 98,000 jobs last month against an anticipated 118,000, helped set the stage for gold's rise. Wong suggested that gold might have established a short-term base unless Thursday's non-farm payrolls report indicates a significant surge in employment. This sentiment was echoed by the rebound in other precious metals, with spot silver adding 2.8% to $60.24 per ounce and platinum rising 3.1% to $1,599.36.
Geopolitical tensions also played a role, as markets monitored updates from US-Iran peace talks in Qatar. While direct negotiations remained unlikely, talks focused on securing a lasting ceasefire and ensuring shipping flow through the Strait of Hormuz. Alongside gold, Bitcoin also experienced a rebound, reclaiming prices above $60,000, indicating a broader market reaction to Warsh's less hawkish tone.
