Gold steadied after falling more than 3% on Friday as US Federal Reserve Chairman Kevin Warsh’s pledge to fight inflation lifted bets the US central bank will raise interest rates. The drop marked gold’s biggest decline in over two months, driven by heightened expectations of tighter monetary policy. Investors reacted to Warsh’s comments signaling a firm stance against inflation, which increased the opportunity cost of holding non-yielding assets like gold.

The metal’s price volatility reflected shifting market sentiment toward higher interest rates, which typically strengthen the dollar and pressure gold prices. Despite the sharp drop, gold found some support as traders assessed the long-term implications of Fed policy moves. The episode underscored the sensitivity of precious metals to central bank rhetoric and interest rate outlook.

Analysts noted that sustained rate-hike expectations could continue to weigh on gold in the near term. Market participants remained watchful for further signals from Fed officials on the pace and scale of tightening.