Golden Watch | Gold prices drop sharply after Walsh's speech—what happens next?

In his keynote speech at the Jackson Hole Global Central Bank Annual Meeting, Federal Reserve Chairman Kevin Walsh outlined a tough stance on combating inflation. The US dollar and US Treasury bonds strengthened, while international gold prices dropped sharply. However, it should be noted that when Walsh was sworn in at the White House as Chairman of the Federal Reserve, he promised to defend the Fed's independence, fight inflation, and promote internal reform. So far, his hawkish statements and dovish actions have raised doubts in the market, with interest rate hike expectations repeatedly changing. In fact, although expectations for a September rate hike have increased, it remains a low-probability event.

The US Treasury's bond buybacks are considered "quasi-quantitative easing" and have formed substantial interaction with the Federal Reserve's monetary policy, also somewhat easing the Fed's rate hike pressure. The Fed's monetary policy has never relied on actual rate hikes or cuts to influence the market, but rather on managing expectations. When the policy is finally implemented, the "sell the news" effect usually follows.

Next week, after consecutive weekly gains, international gold prices may see a decline. However, market speculation is still speculation. With massive US debt and challenging economic conditions, there is little room for further rate hikes. The structural issues facing the US will not be fundamentally solved by Walsh's speeches. Gold prices reflect risk, and the US still faces many uncertain risks.