The crypto and broader financial markets faced renewed monetary policy uncertainty after Federal Reserve Governor Kevin Warsh delivered hawkish remarks that revived expectations of additional interest rate hikes. The comments triggered a sell-off in precious metals and a stronger U.S. dollar, with gold falling below $4,450 and silver dropping toward $66.00 per ounce.
Spot gold slid 0.6% to $4,438 per ounce during early trading after Warsh signaled at a monetary policy forum that persistent inflation could force the Fed to tighten further. The U.S. dollar index rose 0.4% against major currencies, while the benchmark 10-year Treasury yield climbed to 4.32%. Higher yields increase the opportunity cost of holding non-yielding assets, and the effect has historically weighed on gold and silver, as well as on risk-sensitive digital assets.
Michael Hartnett, chief investment strategist at Bank of America, said Warsh's language suggests the Fed is not done fighting inflation, which "changes the calculus for gold, which typically suffers when real yields rise." Jane Foley, senior FX strategist at Rabobank, noted the market is now pricing in a 35% chance of a rate hike by September, a significant shift from a month ago.
Silver fell to near $66.00, testing key support, with next support around $64.50 and resistance at $67.50 and $68.20. Gold was testing its 50-day moving average near $4,420, with further downside toward $4,380. Traders are monitoring U.S. inflation data and the Fed's next policy meeting for direction.
For cryptocurrency markets, the hawkish repricing is likely to be a headwind. Tighter monetary policy and rising real yields tend to reduce appetite for volatile, non-yielding assets. If the dollar and Treasury yields continue to climb, digital assets could face additional pressure, although upcoming economic data may shift expectations quickly.
