Shares of abrdn Physical Gold Shares ETF plunged 3.13% to $42.49 on August 28, after Federal Reserve Chair Kevin Warsh used his Jackson Hole keynote to signal that interest rates will stay elevated longer than markets had hoped — a direct hit to gold, which pays no interest and suffers when yields rise. Warsh's Hawkish Jackson Hole Debut Hammers SGOL — But With Gold Up 95% in a Year, Is This a Blip or a Turning Point?

Shares of abrdn Physical Gold Shares ETF sank 3.13% to $42.49 Friday after Fed Chair Kevin Warsh used his first Jackson Hole speech to warn that inflation remains stubbornly above target — a signal that interest rates may go higher, not lower, in the months ahead. Warsh said that "while this summer's [inflation] readings were better than expected, they do not tell me that underlying trends have meaningfully improved." The sell-off in SGOL, which holds physical gold bars in a London vault, far outpaced spot gold's modest intraday dip, suggesting leveraged and algorithmic traders rushed to unwind positions in gold-backed funds.

  • The Fed Is Leaning Toward a Hike, Not a Cut Warsh has presided over two policy meetings since becoming chair and left the benchmark rate at 3.50%–3.75% at both. But the tone has shifted. The July meeting produced a 9-3 vote to hold, with three dissenters pushing for a hike — raising pressure for action at the September meeting.

J.P. Morgan strategists now expect a 0.25-percentage-point hike in September , and fed funds futures are pricing in 4% by year-end. Higher rates make bonds more attractive compared with gold, which earns nothing — a direct headwind for SGOL holders.

  • Gold's Monster Rally Faces Its Biggest Test PCE inflation — the Fed's preferred gauge — hit 3.7% in July , and the consumer-price measure runs at 3.4%, while the 30-year Treasury yield recently touched 5.31%, its highest since 2007. That combination is toxic for a non-yielding asset. Yet gold still trades near $4,600 an ounce, buoyed by a 135% rally from 2022 lows driven by massive central-bank buying — over 4,000 tons from 2022 to 2025. The question is whether that structural demand can keep absorbing Fed-driven selling pressure.

  • SGOL's Drop Looks Outsized — and That's the Risk The ETF's 3.1% slide dwarfs spot gold's roughly 0.5% decline at the time, exposing how fund flows can amplify moves. Over the past six months, SGOL has bled $207.5 million in net outflows , even as it attracted $96.9 million in the past month — a tug-of-war between long-term accumulators and tactical sellers. With net assets of $6.7 billion and an expense ratio of just 0.17% , SGOL remains one of the cheapest ways to own gold. But cheapness doesn't help when the Fed is actively working against you.

  • What Comes Next: September 16 Is the Date That Matters The next FOMC decision lands September 16, and upcoming inflation and jobs data will have outsized influence on whether Warsh pulls the trigger.

His speech puts him "more clearly at odds with Trump's demand for lower rates," raising political risk around Fed independence. For SGOL shareholders, the calculus is binary: if inflation cools and the hike is shelved, gold's structural rally resumes. If the Fed tightens, expect more sessions like today.