Gold fell more than 1% on Friday after Federal Reserve Chairman Jerome Powell said in his Jackson Hole speech that the US economy needs tight monetary policy to keep inflation down. under control.

“Reducing inflation is likely to require a sustained period of below-trend growth. In addition, weakening labor market conditions are very likely. Although higher interest rates, slower growth and Weaker labor market conditions will reduce inflation, they will also bring some pain to households and businesses,” Powell said.

By 1735 GMT, spot gold was down 1.2% at $1,738.14 an ounce, down 0.4% for the week. Meanwhile, US gold futures closed down 1.2% at $1,749.80.

“Equities and metals are suffering from Powell’s blunt reminder that rates will need to be higher for longer and that perhaps 75 basis points is the default for September, unless the totality of the data suggests otherwise.” contrary,” said Tai Wong, a senior trader at Heraeus Precious Metals in New York.

Although gold is considered a safe bet in times of economic uncertainty, rate hikes increase the opportunity cost of holding the non-interest bearing asset.

Two-year Treasury yields briefly jumped to their highest level since October 2007 before stabilizing near a two-month high, while the dollar recovered from an initial slide.

In other precious metals, spot silver fell 2% to $18.89 per ounce, platinum fell 2% to $863 and palladium fell 1.3% to $2,119.23.