NEW YORK: Gold fell over 1% on Friday after Federal Reserve Chair Jerome Powell in his speech at Jackson Hole said the US economy needed a tight monetary policy until inflation was under control.

Powell said this could mean slower growth, but did not hint at what the Fed might do at its September policy meeting.

Spot gold fell 1.2% to $1,738.14 per ounce by 1335 p.m. ET, en route to fall for a second straight week, down about 0.4% so far. US gold futures settled 1.2% lower at $1,749.8.

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

Gold is considered a hedge against economic risks, but rising interest rates dent the appeal of the non-yielding asset.

Since there was no dovish pivot from Powell, gold will continue to face pressure as it will have to deal with higher interest rates, said Philip Streible, chief market strategist at Blue Line Futures in Chicago.

US two-year Treasury yields briefly popped to their highest since October 2007 before stabilizing near two-month highs, while the dollar rebounded from an initial dip.